And be sure you don’t discount non-financial reasons, if she has them. Buying a house isn’t just a financial decision. It’s not like deciding how to invest the money you’re setting aside for your 401(k), where the decisions you make will affect how much money you have but don’t necessarily make a difference to how you’re living your life now. Whether or not to buy a house, and if so which house, is also a decision about what kind of lifestyle you want to live now.
The type of house and where it is located is obviously going to have a large effect on your lifestyle. The age and condition of the house is also going to affect what your life is like- just ask anybody who’s fixed up an older house. Whether you do it yourself or have someone else do it, it affects how you live while it’s being done.
And don’t think that buying a house is magically going to make you more financially responsible or more domestically-oriented or just somehow more grown-up. It doesn’t work that way. There are ways for a financially irresponsible homeowner to get into trouble (see lots of news stories from the past couple of years for examples). You aren’t necessarily going to enjoy household chores or yard work or home maintenance more now that you’re doing it in a house you own. Some people do, some don’t.
I’ll throw out one more thing that is worth thinking about.
Having a paid-off home when you enter retirement seems like a definite win. But there is a danger. You have to keep in mind demographics, and the rising cost of energy.
If you plan to retire in say 20 years, are you going to want to keep this house? As the baby boomers retire and find themselves with too big, energy-sucking houses in the suburbs, many are going to want to sell those houses and downsize. The problem is that there are millions of other boomers in the same position, (many house rich, but cash poor) so there will be a glut of these large houses for sale and you will find yourself on the wrong side of the supply/demand equation.
Having a paid-off house is great, but only if it is the right kind of house. Reasonably sized, energy efficient, close to amenities and public transit.
I know a lot of people who plan on downsizing as part of their portfolio plans. There are 2 avenues of thought on this. Some people use their house as a cash-cow with the intent on moving anyway because their house was dictated by work. The opposite side of the coin is family where the house becomes the central location for your children.
I would be more worried about taxes than energy because geo-thermal systems are coming down in price. That means the break-even point for the system is becoming shorter. I just watched someone more than double their square footage in a new home and their energy bill is much lower than the older home. These systems rock. Taxes on the other hand could eat into a budget and should be weighed against any benefits they provide. You can build a dream home in the middle of nowhere much cheaper than suburban areas due to the cost of property and taxes. However, you’ll be far away from medical facilities at a time in your life that generally requires more care.