Post # 1
Darling Husband and I are in the beginning stages of thinking about buying our first house. I’ve been browsing listings for a few months and mostly looking around one price point ($200-$225k). I’m confident that we could find a great house for this price in our desired area. Well, today I crunched some numbers and based on our income, debt and estimated down payment we would be able to afford something considerably more. Now, we dont have an approval or anything so I’m sure that figure could change but when I ran the numbers, I bumped up the interest rate and variables higher than I think they will be. The new potential price point would open us up to a whole new realm of houses but that huge number is pretty scary.
So homeowners, when you purchased your home did you max out your budget?
Post # 3
First of all, way to go! That’s great news.
Fiance and I bought a house about 50-60k under what we’d budgeted for, and it’s been awesome. The mortgage payments are so easy, we still had savings after the 20% downpayment was gone, and we love our house!
So yeah, don’t exclude the less expensive houses from your search unless you’ve decided for sure that you want something bigger/in a certain area. Good luck!
Post # 4
No way. We had a budget of $175,000 when building but we wanted to come in way under if we could. We couldn’t get a 15 year mortgage but wanted to pay enough extra principle each month to have our house paid off in 10 years. We came in at $165,000 and already have a huge chunk paid off. 7 more years or less; that’s our goal. We didn’t want to extend ourselves no matter the costs.
Post # 5
Heck no! We definitely bought way under what we could have afforded. I love it and have 0 complaints!
Post # 6
I am extremely conservative with our finances. We’re in the process of saving up to build right now. We have about 70% of the total cost of the home in savings, so we could easily get a loan and start building tomorrow, but I want to make sure we have at least 110% of the estimated cost available (just to be safe) plus enough left over that we won’t be financially uncomfortable. We are definitely in the minority though. I have a lot of family in the real estate/ building industry, and pretty much everyone buys at the top or above their budget.
Post # 7
We bought a house at about half of what we could afford. We are really comfortable with the decision, it gives us a nice big safety net. If something should happen and we need to replace the roof, un-flood the basement, buy new furniture, lose a job, etc, we can still handle it and not lose the house. Alternatively we can just pay off the mortgage sooner.
There are alot of hidden expenses when buying a house (property tax, utilities, all the stuff you have to buy like lawn mowers and appliances) so I’m really glad we went with less than our maximum!
Post # 8
Thanks for the input ladies. I’m almost nervous to even start looking into houses in the higher price range. While I’m sure it would be nice to have a big fancy house, I dont know if its really necessary. This will be our first house and the most responsibility either of us have ever had. I think baby steps may be the best approach.
Theres actually a house for sale about a stones throw from our apartment that we really like. It’s on the smaller side (though still 3 bed/2 bath) and soooooo cheap (bank owned). I could see us living there. If it’s still available in the next few months when we’re *hopefully* ready, I’d love to make an offer.
Post # 9
No way. We started out VERY conservative, and ended up getting a house 20% over our target budget, but still well below what we qualified for.
Post # 10
- Wedding: October 2011 - Bed & Breakfast
No. We are looking at houses that are $200-300k below what we can be approved for. Lenders have given us very perplexed looks when we tell them that we are not interested in the amount that they want to offer us. But we’d rather live comfortably and have a good safety net and retirement savings than max our budget on a house.
Post # 11
I was told by my real estate agent we would be approved for around 400-500k. Uhhhh NO! In our neighbourhood an older, outdated 3 bedroom house goes for around 250-275, so that is our budget.
Even though you are approved for a much higher number, there are a few things to consider:
1. If you or your SO lose your job, can one of you cover the morgage payments?
2. How long do you want to spend paying off your house?
3. If you spend at the top of your price range, will you still be able to save money for yourself, home repairs, renos, etc?
In the end, it’s usually smarter and safer to buy something that seems reasonable and not just because you have been approved.
Post # 12
I have in the past. However, I wouldn’t now.
I was not an irresponsible homeowner, but as we know, the housing market is in the shape it is, because people became house poor and then couldn’t afford to make payments when something in their lives changed.
When I was younger I bought a condo that was $5k below my max approval. I however, had roomates living with me, so it was very easy to pay.
This time around we are only using DH’s income, since I am now self-employed and going through the hassle of putting me on the mortgage isn’t worth it. He was approved for more than double what we want to spend. We laughed at the mortgage broker, because if he actually was single, and spent that much, after his other expenses, he would have $75 a week left over. Could you imagine? That’s nuts.
Post # 13
our house was actually over our initial budget by 20k, but much less then what we initially got approved for.
Post # 14
Under! I always figure, the calculations look fun on paper, but throw a kid in the equation or a job loss, injury etc etc and your in over your head.
We paid for our house upfront with cash because houses were so low and it kept us under budget so to speak.
Luckily, I have found with the state of the realestate market, you can still get what would be an ‘expensive” house for a bargain price!
Post # 15
We budgeted based on one of us being unemployed completely. That was all of our bills are payable on one income, and the other is our fun/retirement/savings money.
Post # 16
Definitely under. We were preapproved for wel over 400,000 and bought a condo for 235,000. It’s enabled us to pay off student loans, take two fairly major vacations in he last five years with a smaller one each year and still save almost my entire salary. We’re staring down the end of time that it’s practical to live in a condo though and I think the next place will be more of a stretch