15 Year Fixed

There are a few non-negotiables Lindsey and I want in our next house.

Her:  

-A nice kitchen (according to her very specific list)

-3+ bedrooms, 2+ bathrooms

-Hilliard Schools (or comparable, but not Southwestern or Columbus city)

Me:

-2 car garage (since I get the street right now)

-Needs nothing:  As some realtor on HGTV said, a lot of young people think they want a fixer-upper, but run away when they actually see one.

Additionally, it would be nice to have a good-sized yard, a large finished basement that could be converted into a projector/movie room, and walking proximity to local schools.  But these would be extras.

Unfortunately, Lindsey and I live in one of the most heavily taxed areas of the country.  A $200,000 house (which looks like the minimum price we will pay for this house) carries around $4,300 in annual property taxes, or $358 per month.  The 30 year fixed payment on a 200k loan at 6.5% would be around $1,264, so $1,622 with taxes.  Dave Ramsey says people should only have a mortgage payment of 25% of their take home pay.  Lindsey and I would be in this range, but Dave says you should forget the 30 year loan even exists and only do a 15 year fixed.  The problem with this, even at the lower interest rate of 5.75%, is that the monthly payment goes up to $1,661, over $2,000 with taxes.  And even if we did take home over $8,000/mo, I'm not so sure I'd want a 2k mortgage payment.  Right now, we're paying less than $650/mo for our condo and building up equity, albeit at a snail's pace.

$98,948/$255,090

What do those numbers mean?  The first one is the total interest paid in the 15 year fixed example, and the second is the total interest for the 30 year fixed example.  This means that if we can sacrifice, save up $60,000 or so in a combination of equity and savings, we can get Loan A, and save over $156,000 in interest payments.  Sometimes, it's frustrating to hear Dave Ramsey say "act your wage", as so few others around me do so.  It's very tempting to go out and get that 30 year loan right now, as we could qualify and comfortably make the payments.  However, this is the time we need to buckle down, not try to keep up with the Joneses, and live well below our means.  It would be really nice to get this taken care of in the next 3 1/2 years.  How amazing would it be to have a paid off house by the time our first kid graduates high school!