5 Reasons to Spend Less on Your Home Purchase

By
Real Estate Broker/Owner with Mint Properties, Lic. #01871795 Lic. #01871795
https://activerain.com/droplet/w2

5 Reasons to Spend Less on Your Home Purchase

Yes, I am a real estate agent and I'm saying this.  Sometimes, you should spend less on a home.  I know it is difficult to turn down when someone wants to give you more money - but of course, they aren't really "giving" it to you, right?  It comes with strings in the form of those monthly payments that crop up with mundane regularity.  Often, I find that high wage earners in particular are put in the difficult position of being offered a higher mortgage than may be reasonable.  But, this advice applies equally to anyone looking to purchase a home.  Less can be more. 

Contrary to what some folks will lead you to believe, there are other important things to consider --rather than just whether the bank WILL lend you the money -- when you are buying a home:

Food --   Food is great, in fact, I eat some of it every day and you probably do as well even though you probably don't realize it.  Some of the stuff is actually very tasty - especially carbs.  And, some of it is very expensive, like restaurant food.  So, if buying this home will cause you to have to give up too much of your food eating habit, you may want to re-think it. 

Utilities - The Ponderosa was a great little spread, but prudent little child that I was, I often found myself wondering how much it took to heat the joint.   If you are looking at homes, you should be wondering about that too.  An extra 500 square feet, is also an additional 500 square feet to heat.  Ask the current owner for a copy of their utility bills, and consider the fact that if you have more people in your household that bill could be higher.  If you are buying a foreclosure, and getting the bank to provide bill copies is not a realistic option, you may be able to get the information from the utility companies directly.  There is no sense in buying the Ponderosa if you and Hoss have to stay huddled up with a space heater because you can't afford to heat the place.

Vacation - One of the big reasons I decided I didn't want to work as an attorney anymore was because of the complete impossibility of taking a vacation.  I took one real 10 day vacation during those years and when I came back another lawyer was already measuring my office for his desk.  Having the money but not the time to take a vacation sucks.  But, not having the money for a vacation can suck just as equally.  Life without vacations can be dreary - you may have bought a nice house but it would also be nice not to have to spend your ENTIRE life in it because you can't afford to go anywhere else. 

Hobbies- Now if your apartment is already filled to the brim with model trains and you are on a first name basis with a representative of the Danbury Mint, this doesn't apply to you.  You probably need to buy a house with a big front yard so you can have a sale.  If you have a reasonable hobby you want to indulge in such as watching sports, it is important to consider whether the home purchase will allow you to continue it.  Maybe you have to give up your season tickets and only go to a game or two.  Maybe you can't afford the High Definition package and can only watch the network games if you buy the house.  But if buying the house would result in you not being able to afford the gas to the stadium so you can stand outside and hear the roar of the crowd, or it requires you to impose yourself on your friends ALL SEASON because they can afford cable and you can't, you might want to re-think your purchase.

Retirement - If your entire retirement plan is purchasing a more ergonomic office chair, you might be fine with spending more on a home.  I personally don't know if I ever would want to completely retire because I like to work, and I'd probably make a job out of my retirement.  "Hey it's 2 o'clock -- my schedule says I am supposed to be relaxing!"  However, due to the wisdom and experience of others on the subject, I want to leave open the POSSIBILITY of changing my mind.  So, I do save for retirement, and I think you should also leave room in your budget to do the same.  If buying this home means that you have to short change your retirement savings, you may want to re-think it.

The "right" house is one that will keep you in line with ALL your financial objectives.  It's important to keep that in mind.  Fifty thousand dollars amortized over 30 years may not seem like much, but it is better to stay within budget and be able to enjoy your life WHILE you live in the home of your dreams. 

Tni LeBlancMint Properties
Broker/Attorney
CA DRE License # 01871795
(805) 878-9879

Serving  Santa Maria, Orcutt, Nipomo, Los Alamos, Santa Ynez, Los Olivos, Solvang, Buellton, Lompoc, Vandenberg Village, Arroyo Grande, Grover Beach, Pismo Beach, and Avila Beach.

Copyright © Tni LeBlanc 2011 *5 Reasons to Spend Less on Your Home Purchase*

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Tni LeBlanc, Broker
(805) 878-9879 mobile/text

tni@mintprop.com
www.MintProp.com
CalBRE #01871795

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Rainmaker
676,419
Cynthia Larsen
Cotati, CA
Independent Broker In Sonoma County, CA

Who wants to be eating peanut butter and jelly? There is nothing worse than living paycheck to paycheck ... this is really good advice.

Jan 04, 2011 04:50 AM #21
Ambassador
463,703
Stacey Smith
Keller Williams Realty - Aliso Viejo, CA
Your Orange County Beach Cities Realtor

Great points Tni,

Those are things that buyer's usually don't think about once they are buying a home, all they know is they have their approval letter in hand, their 401k transferred to their savings/checking and penalites already paid and their days of renting are numbered, because they are ready to go! Buying a house should be one of those things that should balance you out, not leaving you with more of a struggle than before.

Jan 04, 2011 05:53 AM #22
Rainmaker
413,727
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Deborah - Well some in this world are spenders and some are savers, that's just the way it goes I suppose.  It's good to remind folks of what they should keep in mind while they decide what is affordable for them.

Anna - Thanks, I love what I do now.  There is so much more joy to it than litigation and counseling.  Yes, people are more focused on what will keep them in good financial order now.

Cynthia- So true PBJ can get real old real fast.  It's one thing to put off buying furniture for awhile, but quite another to not be able to afford to do any fun activities or save any money.

Stacey - Exactly. The house should be a balancing factor not a weight that is dragging you down.

 

Jan 04, 2011 07:49 AM #23
Rainer
90,609
Maya Swamy
Funds Available - Long Beach, CA
Ph.D. Long Beach, CA - fundsavailable.com

A good reminder to agents and buyers. I lived in one of those fancy tracks once where it seemed a third of the homes had no furniture 5 years later and of course they had taken no vacations either.

I have talked many a client less of a home because the family they are planning will come and adjustable rae mortgage will adjust.

Jan 04, 2011 02:45 PM #24
Rainer
321,498
Jack Mossman - The Nines Team at Keller Williams in Lodi
The Nines Team at Keller Williams in Lodi - Lodi, CA
The Nines Team in Lodi

Tni:

Hoss - Danbury Mint and Retirement ... strange bedfellows, but a great post!  The advice is sage and the wit is perfect!  Thanks for another outstanding post.  Were you this good in court?

Jan 04, 2011 02:46 PM #25
Rainmaker
715,721
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

Hi Tni,

I'm running into a ton of people who want more house than they can afford and if they can't get it - its a no-go. Its maddening because all these buyers are missing out on great interest rates and terrific prices because they "want" more.  THere appears to be a disconnect between wants and needs.

Jan 04, 2011 03:55 PM #26
Rainmaker
413,727
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Dr. Swamy- Yes, so many of those tracts are turning over during the bust.  I have also talked people down as well and later they appreciated it.  Beyond those things mentioned furnishing and repair/maintenance are also big things to consider as well.

Jack Mossman- Yeah, I guess they are disparate -- LOL.  Thanks for the compliment - I hope I was.  Of course, there wasn't as much room for creativity in court!

Ruthmarie - It really doesn't pay to spend more than you need to spend.  We are encouraged in this society to want more than we need so there is no surprise there.  I'm glad they are not handing out big loans like candy anymore at least.

Jan 04, 2011 04:00 PM #27
Rainmaker
732,603
Eileen Hsu
Douglas Elliman Real Estate - Manhattan, NY
LICENSED REAL ESTATE SALESPERSON

Good points. Sometimes on vacations I have to resist the temptation to check emails or on blackberries.

Jan 04, 2011 04:11 PM #28
Rainer
321,498
Jack Mossman - The Nines Team at Keller Williams in Lodi
The Nines Team at Keller Williams in Lodi - Lodi, CA
The Nines Team in Lodi

Oh No, Tni!  Does that mean the creativity we see on TV's law drama isn't really in the courtroom ...??  Now I am crushed!

Jan 04, 2011 05:19 PM #29
Rainmaker
413,727
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Jack - Yes except sometimes the judges are quite hilarious.  I've met a couple Judge Judys and they are a blast.  But that doesn't mean you get to be funny -- it is after all THEIR show.

Jan 04, 2011 05:28 PM #30
Ambassador
876,055
Connie Harvey
Pilkerton Realtors - Brentwood, TN
Realtor - Nashville TN Real Estate

Tni, this was an excellent post that every Buyer should read before starting to look at homes. If people had spent less these last few years we wouldn't be in the mess we're in!

Jan 05, 2011 09:25 AM #31
Rainmaker
108,059
Traci Ferguson
San Luis Obispo Realtor & ecoBroker with Patterson Realty - San Luis Obispo, CA
Realtor, EcoBroker, LEED AP

More pearls!

Tni, you bring up an important point. It really boils down to listening to your client and learning about who they are and what matters to them. I know, it's all oooy gooey, but we are in the people/ service business. A happy client sends you referrals and tells their finds you listened and got them the house that's perfect for them. Perfect usually translates to security and contentment, including being content with the monthly cost of their home and content with their new lifestyle.

Thank you for more pears of wisdom my friend.:)

 Traci (aka.Tni's biggest fan)

Jan 05, 2011 05:08 PM #32
Rainer
144,110
Lydie Ouellet Dickinson
Realty Executives Tri County, Bellingham MA - Bellingham, MA
Realtor

I agree. I agree. I agree. I agree. I couldn't agree more! And, absolutely! Another great post too!

Jan 06, 2011 12:47 AM #33
Rainmaker
158,250
Deborah "Dee Dee" Garvin
C2 Financial - San Diego, CA
C2 Financial

Tni,  I agree with you in principle...however, I have found that the vast majority of my clients through the years knew their own financial limitations.  (Obviously, I was not originating during the liar loan days!!!).  There are basically two loan amount approvals:  One from the lender and one from the borrower.  I have always educated my clients to the ancillary costs (landscaping a new home purchase, for example) of specific purchase options.  I have had exactly one client in over twenty years be absolutely insistent that he could qualify for more...I advised him to move into his $800 a month Suburban (and that was at least 15 years ago!!!)....his financial assessments were totally off base.  I firmly believe most people are capable of making sound decisions if they are given sound advice.  JMHO.

Jan 06, 2011 09:55 AM #34
Rainer
110,120
Pam Sitterly
RE/MAX VINTAGE - Magnolia, TX
CRS Magnolia-Tomball Texas

A nice house gets pretty tiresome pretty quickly if you cannot properly furnish it or have a life outside of making mortgage payments!

Jan 07, 2011 01:50 AM #35
Ambassador
2,272,741
Robert Vegas Bob Swetz
Realty ONE Group - Las Vegas, NV
Las Vegas Henderson Homes for Sale

Hello Tni and VB had to go back 6 pages at the group to find this post! Great post with some great info and we are purchasing an investment home to rent out and we are looking for the smoking deal. Your post has been featured at one of my favorite groups ...

LATE NIGHT - EARLY MORNING AT ACTIVERAIN

Vegas Bob ;)

Jan 07, 2011 07:37 PM #36
Rainmaker
453,615
Allison Stewart
St.Cloud Homes - Saint Cloud, FL
St. Cloud Fl Realtor, Osceola County Real Estate 407-616-9904

Tni- What I like about reading your posts is your candor. I have been around a long time, and have seen the consequences of poor planning, unforeseen circumstances and declining wealth through economic shift.  Is bigger better? No, not really.  It was the high end subdivisions which took the heaviest hits in value when the Real Estate Market collapsed. In addition to the instant equity evaporation; they paid higher property taxes, HOA fees, and CDD fees as well, leaving little to no buffer for basic necessities. The yard sales however... were awesome.

Jan 09, 2011 10:16 PM #38
Rainer
36,576
Manny Bermas
Katy, TX

Hi Tni,  I love your posting.  You said it well.   And spent time writing it up. Keep it up.  I will read up on your other "lists".  I love lists. 

Jan 18, 2011 07:52 AM #39
Rainmaker
599,497
Brian L. Sirota, Esq.
Bristar Realty (Realtor/Attorney) - Orange, CA
For Solutions: (714) 501-7660

Mint advice from a mint realtor!

Jan 18, 2011 11:48 AM #40
Rainmaker
413,727
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Thanks Connie - Glad you liked it!

Traci - You're so funny - I think I'm your biggest fan!  Yes, I want to come back in 5 years and find my clients all comfy cozy and still loving the decision they made.  Buying a home that is truly affordable is a big part of that.

Lydie - I agree too!

Deborah - You are right - I'm sending my clients to you -- sounds like you are giving the best kind of advice.  Some loan agents think nothing about pushing people up to their max!

Pam - You said it!

Vegas Bob - Thanks for the feature!  Glad you were able to find the post!

Valerie - You are so right.  There is more to your financial life than paying a mortgage.

St. Cloud - I bet those yard sales were awesome.  We are all re-learning the value of living within our means.  The main thing is to have a plan and consider everything you want for you life.

Manny - Thanks!  I like lists too!

BriSTAR - Thank you!

Jan 18, 2011 04:32 PM #41
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