Buy What You Can Afford

Real Estate

Clark Howard, the financial guru, states the following concerning buying a home: “When it comes time to buy a house, what the bank says you can afford (based on how much they’ll lend you) may not actually be what you can afford. Committing too much of your monthly income to mortgage payments is risky — and it’s a bad idea. You only want to spend up to one-third of your monthly income on housing costs, which include mortgage payments, insurance fees and any homeowner’s association fees.”

Howard continues by saying: “So when you’re figuring out how much house you can afford, make sure to factor in other important expenses besides just bills — things like saving for retirement, emergency expenses (medical, car repairs etc.) and even the cost of furnishing your brand-new home. You probably won’t be very excited about your decision if you’re stuck in an empty house for two years because you can’t afford to buy anything to put in it.”

Additionally, what Clark fails to mention is that numerous times home buyers purchase a home with an extra bedroom for guests as well as a formal dining room for Thanksgiving and Christmas Dinners. The fact of the matter is, most guest bedrooms are rarely used (if at all), and Thanksgiving and Christmas are only 2 days (of 365) of the year. Crystal and I have a beautiful Murphy bed in our home office for guests (not a dedicated guest bedroom) and we eat out on our screened porch for Thanksgiving. We go elsewhere for Christmas dinner, if we are not on vacation.

The bottom line is: we could well afford to live in a 4000+ sq. ft. home if we chose to, but because we live in a 2160 sq. ft. home, we bank money every month. If you are smart, buy what you can afford, not what you can qualify for.