House poor or no house? Advice?

[starling&diesel]

We pay $2400 a month towards our mortgage, which is way more than is suggested for our income. It's about 50%, but we're managing.
We have an opportunity to move into a co-op, where our housing costs would be more like $700-900.
We are locked into a 5 year mortgage at 3.75%.

Pros:
We could invest the difference
Don't have to worry if the interest rates go up

Cons:
We'd be answering to 30 other residents in the co-op
We'd be out of the housing market

What would you do?

[Drummer's Wife]

That's a tough one. Is there any other options? Would you be able to sell your house? I woudln't be able to live with 30 other people, I don't think, as intriguing as it sounds (plus it would never fly w/my DH). But paying $700 per month sounds pretty good...

[starling&diesel]

We could sell right now, no problem, and probably make a small profit to cover the expense of getting out of the mortgage and moving expenses.

To clarify, there are 30 units in the co-operative housing, so not 30 roommates, thank heavens!

[MyLilPwny]

How big are the units and does it have everything you need? As long as you have the privacy that you need, then I guess that sounds like a good idea.

[just_lily]

If I could sell my house without taking a hit and cut my living expenses down to $700 a month I would totally do it. But only if I was really sure I would enjoy living in the new place for an extended period. It doesn't make any sense at all to pay realty fees and penalties on your mortgage if you are just going to jump back into the housing market in six months. Property values are on the rise again, finally (we are outside Calgary, so I understand) so just be aware that when/if you purchase again you will likely have to pay more to get the same thing.

[mtm]

do you currently stress about money?

[leavemealone]

If I could sell the house and at least break even, I'd probably sell the house. Is there a time frame that you'd be committed to staying in the co-op? Are there other costs associated with being in the co-op housing?

I'd probably at least try the co-op and if it didn't work out, I'd find a place then either to buy or rent. I don't care much about being in the housing market as an owner so that wouldn't stop me.

[laohaire]

You're in a 5 year mortgage?

How far into are you? If you just bought it I'd hate to pay closing fees twice in a row - really expensive.

It's risky but I think if I could be free and clear in 5 years or less I'd be strongly tempted to do it.

Or is this a balloon that you would have had to have refi'd in 5 years?

[starling&diesel]

Originally Posted by laohaire

You're in a 5 year mortgage?

How far into are you? If you just bought it I'd hate to pay closing fees twice in a row - really expensive.

It's risky but I think if I could be free and clear in 5 years or less I'd be strongly tempted to do it.

Or is this a balloon that you would have had to have refi'd in 5 years?

We have to refinance in five years. The amortization is over 30 years.

[starling&diesel]

Originally Posted by mtm

do you currently stress about money?

Not really. We have no other debt than the mortgage, plus we have $20,000 in savings. I've just recently gone back to work now that our DD is one. We don't have money for extras, but we don't miss them either. We live pretty frugal, our large mortgage not withstanding.

[starling&diesel]

Originally Posted by sandcastle

If I could sell the house and at least break even, I'd probably sell the house. Is there a time frame that you'd be committed to staying in the co-op? Are there other costs associated with being in the co-op housing?

I'd probably at least try the co-op and if it didn't work out, I'd find a place then either to buy or rent. I don't care much about being in the housing market as an owner so that wouldn't stop me.

No time frame ... it'd be up to us. And no other major costs associated with the co-op. Any large repair or issue are finance through the Canadian Mortgage and Housing Association, who owns the co-op.

[starling&diesel]

Originally Posted by ThereseReich

How big are the units and does it have everything you need? As long as you have the privacy that you need, then I guess that sounds like a good idea.

This is certainly something we have to investigate. I did put on the application that we'd like to see the unit before committing.

[starling&diesel]

Originally Posted by just_lily

If I could sell my house without taking a hit and cut my living expenses down to $700 a month I would totally do it. But only if I was really sure I would enjoy living in the new place for an extended period. It doesn't make any sense at all to pay realty fees and penalties on your mortgage if you are just going to jump back into the housing market in six months. Property values are on the rise again, finally (we are outside Calgary, so I understand) so just be aware that when/if you purchase again you will likely have to pay more to get the same thing.

This is one of my bigger concerns. I told DP that I'd want to be sure to be happy about what we did with the extra money (invest, travel, harley, what have you) so that we wouldn't regret our decision. I hear you about the values being on the rise. We live in the most expensive market in the entire WORLD. It's just crazy. Nutso. And Calgary isn't far behind us!

[starling&diesel]

Thanks for all your replies! It's helpful having outside input with matters such as these. You can always count on MDC to give some great advice!

[Ola_]

I think on the west coast the market is so different than most other places. I'm close to Toronto and although I don't think it's quite as hot here as Vancouver, it's still quite the hot market. People are still paying more than list price for houses! Anyway, just keep in mind that a lot of the advice is very coloured by the US housing crisis.