The Importance Of Not Being House Poor.....Lets Learn From Our Mistakes.

By
Real Estate Agent with Meritus Group Real Estate SD 14808

What happens when your wants do not meet up with your housing budget? When told of the amount you have available are you determined to use it all? If it doesn't seem like enough do you borrow from family and then have to pay them back later?It seems the vast majority of all buyers I work with do want to use all of their budget and sometimes more. Is this wise with the wreckage of the last generations overindulgences in the housing market still in the process of foreclosure?

Generally it is reccomended to keep your mortgage payment to about 25% of your income but some people push the envelope and go to 30%. While this doesn't seem like such a big distinction it is. A bigger house means bigger payments, higher utilities, higher taxes, higher insurance, higher maintenance costs, and that is not even counting things like any updating you might want to do. A house can be a resource hog if you don't put care into buying the right one. 

If you are buying at the top of your budget because you assume your income will increase what will you do if it doesn't, or if you are laid off? Does it feel like you have plenty of room in your budget now? But will you if you start a family and you have one less income? When buying, have you figured in those special things you like to do? Your daughter's new braces, your yearly vacation, and the family gym membership are all going to take a bite of the pie. Money issues are the number one cause of discourse in marital relationships so is that large house really worth it?

Its very easy to get caught up in the excitement of buying a house without putting any thoughts into the what if's. But if you don't you could have a crippling debt load later that will leave you sitting home eating ramen noodles fighting with you spouse because you would rather go out to eat. Is this big house really worth it if it results in a split in your marriage and you later have to sell it to satisfy your divorce proceedings? So I implore you....think about the what if's before you put in that offer. Life is to short be be living check to check to afford a lifestyle you can't really afford. 

Posted by

 

Rosalie A. Evans                                                                      

HJN Team Real Estate

101 W. 69th St.

Sioux Falls, SD 57108

Cell 605-366-7242

rosaliesellssiouxfalls@gmail.com

 

                                       

 

   

 

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Comments (7)

Kathy Sheehan
Bay Equity, LLC 770-634-4021 - Atlanta, GA
Senior Loan Officer

This is very much like the advice I give my clients.  In my opinion, there are two ways to look at pre-qualification, what you can qualify for based on acceptable ratios and what payment you are comfortable making each month that allows you to maintain your lifestyle.

 

May 06, 2011 12:01 PM
Dennis Puckett
Adams,Cameron & Co. - Deland, FL

Sounds like the same advice I give my clients. Most of them think they have to shop at the approved amount. There's still the "I want it now" concept alive and well.

May 06, 2011 12:04 PM
Allen 2222
Austin, TX

Your advice is very wise - and too many of us have fallen into this trap - and it is a hard one to get out of!

May 06, 2011 12:16 PM
Rosalie Evans
Meritus Group Real Estate - Sioux Falls, SD
The Evans Group, Sioux Falls, SD Homes For Sale

Kathy-You know I seem to hit a wall with people when I start to warn them. I just get the sense that they just  don't want to hear it. I say it anyway to ease my conscience...at least I warned them!

May 06, 2011 12:23 PM
Rosalie Evans
Meritus Group Real Estate - Sioux Falls, SD
The Evans Group, Sioux Falls, SD Homes For Sale

Dennis- I don't know about in the areas harder hit with foreclosures and unemployement but here in South Dakota  I want it now is certainly alive and well. Sigh.

 

Alison- I fell into this trap and lost my shirt on the way out. That is why I am always warning people to be careful how much they spend! I remember those years and they were hell!

May 06, 2011 12:28 PM
Mimi Foster
Falcon Property Solutions - Colorado Springs, CO
Voted Colorado Springs Best Realtor

Oh, Rosalie - how many times I have tried to talk my clients into not pushing the top of the envelope, and how few times they have listened.  What a great post.  A lot of people would be in a lot better shape if they had followed this advice.

May 06, 2011 06:07 PM
Rosalie Evans
Meritus Group Real Estate - Sioux Falls, SD
The Evans Group, Sioux Falls, SD Homes For Sale

Mimi- I personally would have been in better shape had I followed this advice so I make sure they hear it even though they never listen. It's like talking to my children!

May 08, 2011 03:22 PM