Hello, ladies and gentlemen. Below is a short story of a couple looking for financial advice. I'm interested in what your advice would be to them.

Joe and Jane are married with a young son. They are currently planning a move to a new city as per a job transfer for Joe. Each earn a healthy salary in the 50 to 60k range. In their new city they would like to purchase their first home, however, they have a few conditions that they are trying to establish. First, Joe wants to attend law school in the next year or two. Ideally, he would like to go full time, however, they are unsure of how much Jane can support on her salary. They have 50k in savings for their first home, but have thought about using Joe's VA benefits to not require an down payment for a mortgage. The current realestate market in their new area is mid 200k for a small condo and about 350-400k for a single family home. Joe and Jane don't know what to do...can you give any advice?

So what is I would do the move and start off small and see what happens.

To keep this answer very short:

1. Inquire how much the monthly mortgage payments would be for the house/condo they wish to acquire

2. Invest the 50k to create monthly cash-flow which will be more then enough to off-set mortgage payments.

3. Wait until the housing market continues to deteriorate furhter.

4. Shop for a bargain, get a traditional 30-year mortgage and pay it with the monthly cash-flow form investments.

Using cash-flow from real assets to finance liabilities will prevent potential future problems.

Unfortunately the majority of consumers/home-owners do not choose this path ... just one reason of the recent problems in the housing markets as well as the credit markets.

Sounds like a lot of changes all at once. Maybe work, maybe school, maybe Jane won't earn so much in the new town, maybe condo, maybe house...

Figure out what you want while you rent for a while. Give yourself 6 months or so to make some decisions. Don't over commit when you have so many questions about what you want to do. Six months will also give you time to check out the area and decide if you are staying and what part of town is best for a growing family. You may also see more deals by spring as foreclosures saturate the market.

Give it a year and then go from there