I completely understand why some aspiring homeowners contemplate stretching their budget to buy a new home. When my husband and I hunted for houses in Florida, we could have easily rationalized going with a higher price point. My husband insisted he would be earning more money each year, which would make it easier for us to afford our mortgage payments. I argued our expenses would go down after we finished furnishing and landscaping the new house. According to a recent Bankrate.com article, people are tempted to stretch their budget to buy a home while interest rates are still low and home prices are still reasonable. Although we contemplated buying a home twice as expensive as the one we purchased, our good sense prevailed.
Getting preapproved for misery
We were preapproved to buy a home for $400,000, but we didn't view that as our spending budget for a new home. Instead, we through about how much we would have to sacrifice in order to make the payment on a home that expensive. I am so glad we didn't spend the maximum amount we were approved for in 2005. We purchased a home for half as much or about $183,000. Because we can easily afford our mortgage payments, we can splurge on vacations and tech toys.
Paying less in property taxes
By purchasing a home in a lower price range, we pay considerably less in property taxes compared to our friends who live in swankier neighborhoods. We chose a community that did not include CDD (community development district) fees that pay for amenities and the infrastructure of the subdivision. We pay just $400 a year for home owner association fees, while many of our peers pay an extra $2,000 a year or more in CDD fees. Our property taxes are just $1,300 a year, which is extremely low in our area.
Having breathing room
If we had purchased a more expensive home, we would not have been able to handle all the financial curveballs thrown at us. First, we had to deal with pay cuts during the Great Recession as opposed to those pay increases we had become accustomed to in the 1990s. Also, we couldn't take out a home equity line of credit because we had zero equity. In fact, we had negative equity in our home after the housing crash. Buying a home we could afford made it easier to live on one income and save for our children's college and retirement.
Perhaps the greatest reward of owning a less expensive home is being able to own it free and clear in less time. I know we technically could have afforded the $2,000 a month mortgage payments, although granted, it would have stretched our budget. With a low payment of only $900 a month, we can afford to pay off our home in half the time while also enjoying our extra spending money.
Getting preapproved for misery
We were preapproved to buy a home for $400,000, but we didn't view that as our spending budget for a new home. Instead, we through about how much we would have to sacrifice in order to make the payment on a home that expensive. I am so glad we didn't spend the maximum amount we were approved for in 2005. We purchased a home for half as much or about $183,000. Because we can easily afford our mortgage payments, we can splurge on vacations and tech toys.
Paying less in property taxes
By purchasing a home in a lower price range, we pay considerably less in property taxes compared to our friends who live in swankier neighborhoods. We chose a community that did not include CDD (community development district) fees that pay for amenities and the infrastructure of the subdivision. We pay just $400 a year for home owner association fees, while many of our peers pay an extra $2,000 a year or more in CDD fees. Our property taxes are just $1,300 a year, which is extremely low in our area.
Having breathing room
If we had purchased a more expensive home, we would not have been able to handle all the financial curveballs thrown at us. First, we had to deal with pay cuts during the Great Recession as opposed to those pay increases we had become accustomed to in the 1990s. Also, we couldn't take out a home equity line of credit because we had zero equity. In fact, we had negative equity in our home after the housing crash. Buying a home we could afford made it easier to live on one income and save for our children's college and retirement.
Perhaps the greatest reward of owning a less expensive home is being able to own it free and clear in less time. I know we technically could have afforded the $2,000 a month mortgage payments, although granted, it would have stretched our budget. With a low payment of only $900 a month, we can afford to pay off our home in half the time while also enjoying our extra spending money.
