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My wife and I currently live right outside of Washington, DC which is up there as one of the more expensive places to live. We are both relatively young. We have been diligently saving up for the down payment on a home, living in a one bed room apartment to save as much as possible and even then we will still only be able to afford an ok town house or an older single family home. We were looking at some other such as North Carolina and for half the price we could buy a really freaking nice home. This would allow us to pay 40-50% down with the money we have saved for the more expensive home. My salary would go down, so that would need to be taken into account, but I still think our quality of life would be higher down there. I used the cost of living calculator to compare where I live with other places and some of the cost of living calculators said that I could be making about 30-40% less and still have a better quality of life.

So this got me thinking, for building of wealth is this a good idea? My mortgage payment will be more than half as expensive down in the cheaper areas, but with interest rates at an all time low I feel like me putting in that 2X larger amount per month may end up benefiting me in the long run when I go to sell the house as I will have paid more equity in the home. Am I thinking that this is correct in thinking this? I am assuming I can find a decent job in these lower cost areas and that I will take a pay decrease, but not much. I happen to be lucky enough to work in a really hot industry now so finding a job hopefully wouldn't be an issue even with the economy not doing so well. Lets just assume that we aren't looking at the other factors though. Is it better to live in a more expensive house with a higher salary, or a cheaper house with a lower salary when the interest rates are below 4% and the housing market has hopefully reached bottom that would allow you to build more equity in the home or is it better to have a lower monthly payment and therefore need to pay a lot less in interest?
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From a math point-of-view - it would depend on what you did w/ the money you aren't putting toward the mortgage in NC. What are those alternatives?

From a risk point-of-view - "housing market has hopefully reached bottom" How much are you (and your wife) willing to bet that is the case? An NC location would help you diversify, and provide some flexibility if something happens down the road.

From a quality of life point-of-view - hard to quantify. Some people like the urban lifestyle, some rural. Personally, I live in a metro area of 400,000 people - median home price $105k. Live in a 4,000 sqft house on 1-1/2 acres bought for $230k, that would be well over $500k in larger markets in the midwest, let alone the coasts. Love the slower pace of life, and the financial flexibility to travel to larger cities when the need/want arises.

Happy deciding!
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DC and its suburbs provide access to great museums and year around festivities. Home of the “power lunch,” roughly a half million federal government workers with pensions are able to enjoy a lifestyle supported by US taxpayers. Flights are plentiful to Europe from Dulles International Airport. There’s also a great cluster of world class universities including: Georgetown, UVA, and William & Mary within 2.5 hours away. The public high school system is also one of the nation’s best.
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