Should we place an offer on a home at the top end of our budget?

posted 2 years ago in Home
  • poll: What would you recommend doing?
    Buy the home in desired neighborhood at top of budget, assume prices will continue to skyrocket : (48 votes)
    83 %
    Wait for Spring market to see if one at lower price comes up in that neighborhood : (10 votes)
    17 %
  • Post # 2
    Member
    1104 posts
    Bumble bee
    • Wedding: September 2017

    As an agent and a real estate investor myself, if the neighborhood is GREAT and steadily growing, I would do it. 27% isn’t bad. If you are able to still save money and live  your normal day to day lives without financial struggle, this is a no brainer. You can also slowly update the house to increase your equity. I’m alllll about location, less concerned with the condition of the house (in most cases, I dont mess with structural issues. Other things don’t bother me as much). You can change the condition, you can’t change the location. 

     

    Good luck OP! 

    Post # 3
    Member
    1038 posts
    Bumble bee

    We bought a house at the top of our budget. I made an excel spreadsheet and put in estimates for monthly expenses. Everything including cable and internet to groceries to property taxes. I overestimated when I didn’t know an exact number. 

    In the end we were comfortable with what was left over. 

    If that’s the case for you, I’d go for it. If you think things will be too tight for comfort then I’d probably keep looking. 

    Post # 4
    Member
    6444 posts
    Bee Keeper

    I say do it!  Even if they budge a bit that would help, but if not you probably could swing it just rearrange your budget a bit to accommodate the mortgage.  If this is the type of neighborhood where houses just don’t appear much than don’t take the chance that another one will appear.

    Post # 5
    Member
    5578 posts
    Bee Keeper
    • Wedding: July 2018

     No one else can really advise you properly, you have to sit down and work through the numbers.  Consider how you will save for the renovations if it’s quite dated, how you would budget on one income etc. 

    Post # 6
    Member
    1631 posts
    Bumble bee

    I would buy it. If the neighborhood is *that* hot, it’ll eventually bring the values of everything up. But I also think the fact that it’s close to your in-laws is important. I would personally pay extra to live close to free backup childcare. I wouldn’t risk the spring market if you actually like this house. 27% doesn’t seem like a big deal to me and seems like something that will go away with a raise or promotion. 

    Post # 7
    Member
    1104 posts
    Bumble bee
    • Wedding: September 2017

    Just want to add…at least in my market the spring market is nuts and it’s ramping up already. Almost every house has multiple offers. I saw one sell yesterday for $65k over asking price. If you can get this without competeing against other bidders, do it. If you wait, you run the risk of not even getting a house until the fall (due to multiple offers).

    Post # 8
    Member
    2229 posts
    Buzzing bee
    • Wedding: July 2018

    I don’t think 27% is too high, especially if you live frugally and don’t have debt (even student loans?!).

    My mortgage is about 28-30% of my take-home pay… my ex-husband and I originally bought the house together, and I bought him out when we split up and pay for it all myself now.  I still manage to put 15-20% of my income into retirement, have some savings, have enough bonus money to do a few fun trips a year, ec.  It’s not ideal forever but for now it’s fine.  My house also probably won’t go up tooo much in value (relatively stable market here), whereas yours would, so that’s an extra bonus.

    Post # 9
    Member
    3199 posts
    Sugar bee

    Given your circumstances being vastly different than the people that rule is made for (the living on credit, no savings, no retirement crowd). If you have job security and a rainy day fund, then I’d say that you’re probably going to be comparatively fine to go for this house and it sounds like it is exactly what you’re looking for in a house.

    Post # 10
    Member
    488 posts
    Helper bee
    • Wedding: July 2016

    There are many more factors to this.  Assuming you can get the house for that price and assuming you will not have to put any substantial money ($10k+) into it in the first couple of years, then I think using 27% of your income towards it is doable.  Some things I would think about:

    1) Can you get the house for that price?  If the neighborhood is so desirable, what are the chances it will go above asking price?

    2) Are you ready to walk away from the house if the home inspections show the need for repairs and updates in the near future that are expensive?  It sounds like the current owners will not be open to adjusting the price for this kind of stuff.

    3) Do you believe your incomes will increase in the next two years?  Increased income in the near future will help make things comfortable.  

    4) Will you want to renovate the house?  I wouldn’t settle for a dated kitchen and bathrooms if I couldn’t afford to update them within a year or so. 

    5) Lastly, budget, budget, budget.  You are the only one who truly knows what you are comfortable living with and what debts/payments you have to make each month.  Many people spend closer to 40% of their income on their housing and others prefer to keep it under 20%.  It sounds like getting into this neighborhood will be a major benefit down the road.  Good luck Bee!

    Post # 12
    Member
    5916 posts
    Bee Keeper

    I was all set to say no, thinking you were getting in over your heads & being overly optimistic, but you guys sound quite responsible and IMO 27% is actually quite do-able. Considering you’re factoring in close to in-laws, great schools, lots of amenities etc, I’d go for it. 

    Post # 13
    Member
    5916 posts
    Bee Keeper

    p.s. Please also consider that if you wait until spring, others will be doing this too. And a lower priced home in a very sought after neighbourhood could very well enter you into a bidding war that drives up the price. 

    Post # 14
    Member
    7916 posts
    Bumble Beekeeper

    MrsSmore :  buy it. 27% isn’t THAT much over your desired spending limit and if the market is as hot as you say you will kick yourself if you don’t. We bought at the top of our budget nearly 5 years ago and the house has was bought for $340k and now is worth at least $500k. Many houses similar to ours are selling in the 600s. Our market is HOT and literal we could never afford to buy here now. It’s also a fixer upper but we’re doing projects all the time and it is home. Plus the payment feels less and less every year as we keep getting raises at work. 

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