Variables that factor into your perception of what's "too much house"?

[LisaKinVA]

Around here, the $125/sq. ft. is the finished price of the house (standard 2-story colonial), including the lot. Our house (with mid- to upper-end finishes on the interior, mid-range on the exterior) prices out at $128.00 a sq. ft. We live in No. VA, and I'd be willing to bet the COL is higher than where your sister lives... Building can be more expensive than buying, the most important thing is to have a solid plan and *not* deviate. In that area, a house of that size could be built from starting at $98/sq. ft. (costs going up depending upon style/architecture/roof lines/finish quality). They will need a line-item budget to track expenses, and no change-orders. Honestly, it takes about a year of planning BEFORE you build to really nail things down. $125/sq.ft. in Montgomery, AL is a *very* nice house, if that is exclusive of the land...

 

You mention your BIL/Sister already paid for the lot, AND they have $110,000 in addition. If so, their mortgage would be closer $450,000, which would *not* be too much house at $165,000 a year. If they have not paid for their lot completely, that would change their mortgage a bit...even still a $490,000 mortgage is not out of line for that income. FWIW, they should keep the $110,000 in cash throughout the building process for overruns. If they paid for their lot, that should be more than enough for their down payment on the construction loan (that's nearly 30%). I know you didn't ask this...I'm just speaking from experience.

 

Personally speaking, if they are making $165-$200k a year, and their mortgage is around $450,000 ($125/sq. ft. to build less $110,000), their payments (including taxes, insurance, etc.) will be around $2600/month. If they make one or two extra payment a year, they could comfortably pay off the house in 15 years or less, without really impacting their life style at all. The house could be paid for when they are ready to retire. I'd take the 30 year note, only because if there is a hiccup, the required monthly payment is lower, making it easier to adjust a budget during difficult times. If your sister wants to quit her job, and they want to live off of the $115,000, it will require some adjustments, but would still be doable (especially if they don't have any other debt). So from that stand point, it doesn't seem like "too much" financially.

 

A 4500 sq.ft. house is more house to clean than a 2500 sq. ft. house...but it doesn't have to be a huge chore, either. We have 3300 finished square feet, and another 2000 in the basement. We spend about 1 hour cleaning a day to maintain the house (that excludes daily work we'd do regardless of the size of the house, like dishes). The layout has much more to do with it (and with wasted space). If they build in the right finishes (oil based paint on the wood trim, eggshell for the wall paint, tile, hardwood, eliminate unnecessary doors, have a mudroom), excellent insulation, good windows and a proper filtration for the right heating/cooling system, the house should not be difficult or expensive to maintain. I say this because our house costs under $200/month to heat/cool. I've looked into renting similar sized homes and while we would save $$ on the mortgage, the heating/cooling costs drive the monthly operational costs right back up to nearly what we're spending. We have the *lowest* heating/cooling costs of any house in our neighborhood (they all have heat pump for a/c and propane for heat. Most of our neighbors are spending $500-$1000/mo. to heat their homes, and they are gone all day).

 

Generally speaking, no I don't think that is "too much house" for their income level, but there are a lot of "ifs" in my equation. I would simply encourage your sister and BIL to really take their time in the planning stage...the majority of people I know whose costs went up dramatically didn't spend the time planning and/or made lots of changes on the fly. The others (like us) had cost over-runs because of improper bidding by our builder (our foundation was twice his estimate, but we didn't find out until later that he didn't actually GET an estimate for the foundation...grrr). Our house went over budget, mainly because of that one line item...however our mortgage is still roughly $100,000 less than the sales-value of the home, the others we know have a house that cost about $200,000 more than the value of the home, because of a rush to build, no proper planning, estimating, etc.)

[Audrey]

My criteria has always been that, if you (with the help of your family) can't keep your house clean without hiring professional help, it's too much house.

 

 

This, with the addition that you also have too much house if you have rooms you do not use frequently.

 

And... I'll stop there because oh honey do I ever have a whole lot to say on the size of houses. :sneaky2: :lol: