<prompt> Human: Im facing a dilemma that I really cant make my mind up about here. My wife and I have saved up about 180000 for a house around Melbourne, FL which is enough to get us a pretty decent house with enough room for a family on the mainland. Whats killing us though is it wont be exactly what we want and the schools in that area are not that greatest. For about twice that much, we can get a comparable, but slightly nicer home on the barrier island -- an area that has much better schools. We dont have kids yet, but expect to within a couple of years. To me, the biggest downside of taking out a mortgage is the lost transaction cost.So what makes the most sense? Go with the house we can buy with cash and save toward an upgrade later or go ahead and take out the loan so we can be in the house we want for the long term?  <response>: Location. Pay for it now.Youve saved up 180K in less than probably 10 years Im guessing, so over 18K a year, while most likely paying rent at the same time.A 180K will probably cost you an extra 700month give or take. If you buysell a house, youre looking at say 4K in closing costs to buy this. Youll pay 6 commissions on this one when you sell another 10K or so. So youre throwing away about 15K right there.Meanwhile, over the next couple of years both of these houses will appreciate and youll be kicking yourself for not getting some nicer. Appreciation is usually 3 a year, some areas higher, depending on inflation. So that 360K house will go up by nearly 10K a year, while yours will jump 5K, meaning when you do go to buy, youll have to cover that 5K a year difference, which will be about what youre paying in interest on that 180K loan today!The new minimum wage theyre pushing will push home prices higher, and also push inflation, so you might end up buying at below inflation and wanting to hold that mortgage debt, as it could be paid off by inflation, instead of you! Debt isnt bad if you can manage it, and it sounds like you guys can save 20K a year. By buying cheaper, youll waste about 20K in the first year in inflation difference, closing costs and 6 commission and then 5K a year there after.. Tag in the fact that you could pay it down by 20K a year or more, and youre looking at being debt free in like 6 or 7 years, possibly less if you wanted. However I think in 3-4 years well see some inflation and youll want to pay it down as slowly as possible. 