Buying a house— push the budget or no?

posted 2 months ago in The Lounge
Post # 2
Member
1021 posts
Bumble bee
  • Wedding: October 2018

bouviebee :  NEVER go to the top of your price range. and try to come up with more than 10% down to avoid the pmi insurance. my husband and i (not that you need to do this, im just telling you what we did) were very frugal with what we were willing to spend on our home. we wanted to be able to live comfortably on one income. we both make really good money but we bought a house a whole 150,000 dollars less that what the mortage lenders wanted to give us and we put down 30%. our mortgage is so low that it is hardly a factor to us. we do however, live in a good town with great schools so the taxes are high but its worth it for our son.

 the worst mistake you can make for yourself is to become house poor. dont do that

Post # 3
Member
6880 posts
Busy Beekeeper

bouviebee :  how many bedrooms are you looking at? I was in a similar situation when I bought and I pushed the budget a little bit to get a 3-bedroom house in a very nice location (so nice I couldn’t afford it if I was buying now! lol)  My husband (then boyfriend) was moving in with me right away and we had a rental agreement so I was never paying it alone. I could pay it alone, but like you it would have been a little tight. I also could have taken on up to 2 roommates if we had broken up and I needed more cash so I felt ok stretching it a little. Nearly 6 years later and we both make so much more money that the mortgage isn’t a stretch at all and because we chose the best location we could get into our equity has exploded. Like literally doubled in value. 

 

Post # 5
Member
269 posts
Helper bee
  • Wedding: May 2012

Do not push the budget!

What if something breaks? Could you afford a new water heater, AC unit, or whatever it is?

What if something happened that wasn’t house related, like your car broke down and you needed a new one? What if you got laid off at work? 

Upgrade houses a few years after your SO moves in and can contribute to the expenses. Don’t buy on “what ifs”. 

Post # 6
Member
3510 posts
Sugar bee
  • Wedding: April 29th, 2016

Are you planning on this being your forever home? Do you want to have children someday? I think that location and safety are important to consider for the long-term, but living paycheck to paycheck is scary and I would avoid potentially being “house poor” at all costs. Would you be able to save up more or do you anticipate any bumps in pay anytime soon? Since you’re technically buying this house by yourself, I think you should comfortably be able to pay your mortgage on your own. You mentioned that the expensive houses aren’t anything special, but a lower priced fixer-upper may come on the market too. Move-in ready is always ideal but, sometimes you can buy cheap and renovate for less than what the nice houses are going for in the good neighborhoods. My husband and I bought a double home in a trendy part of town and live in the upper apartment. We rent out the lower apartment, so our tenant is paying our mortgage plus some. We will then be able to rent out our upper apartment for additional income when we’re ready for our forever home. Being a live-in landlord isn’t for everyone though, but it’s been a great option for us. Good luck! 

Post # 7
Member
3073 posts
Sugar bee

Don’t forget about taxes which have risen substantially where I live. I don’t think buying a house where you’re scrounging for funds at the end of the month makes much sense. You can always trade up houses if your financial position improves. As too good and bad areas, all I know is that Hoboken NJ was basically awful while I was growing up and you could buy property there for a song. Now it’s the hottest market going. But it all depends on what makes these areas better or worse. I don’t tend to worry about crime, it can happen anywhere, get an alarm system if you’re afraid. What scares me is having not enough money to pay bills.

Post # 9
Member
2642 posts
Sugar bee
  • Wedding: July 2011

Is this your forever home? I’d always say get on the ladder and look for a house you can add value to and move up the ladder after a few years.

dont stretch yourself bouviebee :  

Post # 10
Member
116 posts
Blushing bee
  • Wedding: December 2013

Can you sell the house in the not so nice areas easily? If it’s not a forever home, that would be my concern. Personally, I’d buy the worst house in the nicest area and fix it up over time. You can always fix a house, but you can’t move your plot of land somewhere else.

Post # 11
Member
6880 posts
Busy Beekeeper

bouviebee :  if it’s not a forever house definitely keep the resale in mind. I’ve had friends that bought 1-2 bedrooms in the so-so areas when they were single and they got stuck with that property when they got married and wanted to upgrade. One even became a reluctant landlord because she couldn’t sell the thing and this is the town next to mine where complete pieces of crap sell in a hot second for over asking price. Location is SO important. 

How tight are we really talking? What percentage of monthly income would you be able to save if you were at the top of your budget? What are you other debts? Do you anticipate more debt in the next few years like a car or school loan? Would you be willing and able to rent out the extra bedrooms to make it less tight? 

Post # 12
Member
662 posts
Busy bee

I normally wouldn’t recommend stretching yourself, but if you are planning to split costs with your SO, it would change things a little. I’d consider the following:

1. How good are your emergency reserves? Could they cover unexpected maintenance if you stretched?

2. How do the schools compare in the good neighborhood vs the not so good one? You may not need schools but schools impact sale/resale value. 

3. Is there career/income growth ahead of you? 

4. A 5-10 year horizon is pretty decent in terms of recouping enough that you’ll cover closing costs plus see some appreciation, but if the higher crime area is a stepping stone, could you just skip that step and rent temporarily until the nicer area is in your budget?

 

 

Post # 13
Member
876 posts
Busy bee

bouviebee :  Your Realtor should be acting in your best interest. Seems like you have stressed a lot more of the price than the comfort. I highly recommend going for the home in the cheaper range, BUT in the safest area you can find. This way you’re more financially comfortable, not so stressed about your livilihood. AND you are not in constant neighborhood fear. 

Find the balance that suits you. Make sure your realtor understands your position in balance. 

Post # 14
Member
3510 posts
Sugar bee
  • Wedding: April 29th, 2016

bouviebee :  Yikes! That’s a lot of moving. I’d want to stay put for a while too. Unfortunately, it doesn’t sound like there’s an easy decision here, but a lot of other posters have given you some great things to think about. Wishing you the best of luck! 🙂 

Post # 15
Member
1022 posts
Bumble bee

bouviebee :  Not all loan programs require 20% down to avoid PMI! Be sure to look around, perhaps talk to a mortgage broker to find you the best loan product to suit your situation. I was able to get a conventional jumbo loan (loans for one-unit properties in excess of about $453,000) with 10% down and NO PMI with a great interest rate and a reputable lender (I bought almost 3 years ago and they still have my note – e.g., they haven’t sold off my loan to someone else). So there are programs ou there! 

Leave a comment


Find Amazing Vendors