Post # 16
Online calculators are not exactly the most reliable source. Zillow estimates aren’t either. The best thing you can do is head to your local bank and meet with a mortgage person. They can tell you what you actually can get pre-approved for, and from there you can comfortably decide how much you want to spend.
There are a lot of factors that go into decided what and where the right house is for you. How long do you plan to stay there? Resale value? Does it need work? Etc. Look at how much you currently spend on rent and house bills – add taxes/insurance to it. Add a buffer for repairs and things that will need to be done. Like replacing the AC if it goes out, or the hot water heater, etc.
We spent $340,000 on our first house. It was much larger than we needed at the time (2550sqft, 3 bed 2.3 bath + bonus room) but inventory for the kind of house we wanted was low in our area at the time. In a perfect world we would have loved to spend less but there wasn’t anything in our area under the $350k range that we were interested in. We got a great deal because we bought it FSBO from a local pastor and his family who were relocating and were happy to see their house go to a young couple getting started. It needed a few updates but nothing was so offensive we couldn’t live with it, mostly it was just not our style. We planned to be in that home 3-5 years….we ended up staying there 9.
Our current house we paid $510,000. It’s larger (3200sqft 3 bed 3.5 bath in the main house and a guest suite w/ bath over the garage) and in a much better neighborhood. The previous owner took a $200k hit on this house, which he built custom only 6 years ago and then got a divorce.
Both times we were pre-approved for more than that, in fact our bankers is our current neighbor and good friend. That being said we know what we were comfortable with and what we were willing to pay for a house.
Post # 17
Threads like this kill my soul lol. We are in Ontario, Canada and bought our house for 499k which was a steal. Sad. We spent about 50k less than we felt comfortable spending.
Post # 18
We spent less, but I already owned a home outright that we will put towards that mortgage.
That calculator doesn’t take into account taxes either, which are a huge factor in my experience. We bought in the “town” directly next to our city and pay about $3k less a year than we did literally one mile over.
If you ever plan on kids get the very best school district you can IMO. It’s good for resale as well.
Post # 19
We spent ~ 50-60% less on our house than the calculator suggested.
Post # 20
We spent a lot less than we could have been approved for, based on our salaries and spending we could have been approved for a mortgage around £250,000, but we bought our house for 165k. We had been renting for a few years so knew how much we could comfortably afford to spend on a mortgage, which helped a lot. My brother and his fiancée bought a house at the top of their affordability and they’ve had to borrow money from her parents for repairs as they have no money spare and couldn’t get approved for a loan or credit card, that really isn’t a situation I ever want to be in.
Post # 21
lifeisbeeutiful : Right?! We’re in the California Bay Area (North of SF, but still close enough that around $500k is still the standard price for most single family homes).
I’m going to back away slowly from this thread and remind myself that I love my state, I love my state, I love my state.
Post # 22
We paid about $50k less than what the calculator says we could afford. We now make almost double what we did then though.
Post # 23
TwilightRarity : LOL we looked at relocating to Pasadena last year, which lasted for about 30 seconds once we checked out realtor.com. WOAH BOY.
Post # 24
I’m going to go against the grain here and say we spent more than we anticipated, not more than we were pre-approved for, but definitely more than we originally wanted to spend.
That said, we had some factors to consider:
1- We have 3 kids (one on the way) and we knew when we were house shopping we’d be a family of 5 and needed to upgrade to at least 1 more bedroom and bathroom combo
2- We needed something with at least 5 acres for our animals (this really minimized our search results)
3- School zone was VERY important to us since we have school aged kiddos and the “bad” rated schools in our area are truly very, very underfunded and not somewhere I’d send my kids
4- We needed storage space or a place we could build a shed or barn if need be for our various “toys” (riding lawn mower, outdoor equipment, etc), many HOA’s in our area do not allow storage sheds or anything of that nature, so that also cut down on areas of town we looked in.
When we found our house it checked all the boxes and then some! We knew we were going to be at the top of our budget, but we couldn’t pass it up. I’m willing to cut corners in other areas of life to make sure the kids go to a good school and that we have room for our little farm.
Post # 25
we spent about 30% less then what the calculator/mortgage lenders said we could spend, but we still spent more then what we had initially budgeted/hoped to spend.
We set our house budget based on our overall financial budget (i.e. how much did we want to spend on house total – including insurance, taxes, monthly allocation for repairs/maintenance/improvements/new furnishings/etc) rather then around calculator or lenders estimates of what we could afford if we stretched ourselves thin.
We knew what our actual house needs were (rather then house luxuries) and stuck to those during our hunt. The house we ended up in ticked all the non-changeable criteria (location, style, neighborhood, layout) and needed pretty minor updates on the changeable elements (cosmetics, a few upgrades, etc). So we felt comfortable going slightly above our initial budget.
We could still afford the house + most lifestyle elements even if we dropped to a single salary (which was our key concern) but obviously our savings would dramatically slow and we’d have to make a few cut-backs (e.g. bring lunch a few times a week, move my horse a bit further away to lower cost barn, reduce splurges on clothes/dinners out/weekends away) – so nothing dramatic.
We also budgeted in extra payments (we pay about 25-50% more each month on top towards principle) as we’re hoping to pay off the mortgage in ~10 years vs 30. So we factored that into our dual-income budget as well (obviously that would reduce if one of us were to lose our income).
Post # 26
sboom : This! We live in a very HCOL area and though we spent under the calculator amount/less than we were approved for, we pay a higher % of our monthly income than is recommended by most financial gurus. We went through our budget, decided what we could get rid of (and got rid of it before making any offers), how much savings we wanted, etc. and refused to go over the number we came up with for our montly mortgage. Some people would rather live frugally and spend more on their house/neighborhood, others would rather have more disposable income. It depends on what you want and making sure that your house/mortgage fit your lifestyle.
Post # 27
We spent way less than any calculator told us we could afford. Basically we wanted to ensure our payments were low enough that we could it afford it comfortably on 1 salary (should anything happen). So we didn’t spend too much and put a LOT down. Our actual mortage payment is like $600 biweekly, and we are paying extra on top to pay it off sooner. I’d love to have it paid off entirely in the next 10 years, which would be 15 total.
That said, we aren’t planning on kids, but purposely bought a 3 bedroom house in a family community. So if we do need to sell we thought about re-sale in most of our designs.
Post # 28
When my XH and I were buying the house in 2002, the calculator said $200,000 and we were approved for such. Holy crap! We only made around $50K combined at the time! Instead, I insisted we look at houses in the $100,000 range. We fell in love with the 4th one we looked at and bought it, for $100,000. We were able to keep it through XH’s job loss, and then when I wanted to stay home with my daughter we could still afford it on his salary. Then, when we divorced, he didn’t want it and I was easily able to keep it. It’s paid down pretty low now, and I was able to take out a HELOC for some repairs and remodel projects I needed.
DEFINITELY buy less than the calculator says.
Post # 29
dianaj17 : we spent 25% of what the calculator said we could afford. However we paid cash and only bought a small condo.
Post # 30
That calculator is insane! We spent about half what it says we can afford and we both have six-figure jobs. If we had the kind of mortgage it suggested, by the time we added property taxes, insurance, and house bills/upkeep, we would be spending well over 50% of our PRE-TAX income on housing and 75% OF OUR TAKE HOME PAY.
We make over $250k and would have less than $40k to save, eat, car expenses, educate our kids, medical expenses, travel, etc if we bought a $1.3M home. Talk about living on the edge. Yikes! (And yes, I know most people do all that on $40k or less a year but to be spending $140k on a home and only have $40k left for all that is incredibly financially reckless).