Affordability Shmaffordability – Why You Should Just Buy The Home You Want

We’re told to be practical with our real estate purchases. Be cautious. Be smart. But what if the smartest move is the one that puts you in the home you want, not the one you’ll settle for because it’s a safer bet financially?

Will you work harder to protect your investment? Cut back in other areas to be able to afford it? When it comes to goal setting, doesn’t a dream home represent the ultimate prize?

“When I buy a house of my own, my wallet will have to open wide. Why? Because the expense is worth it. A house affects so much of your life,” said First Quarter Finance. “Living in a beautiful house improves my mood quite a lot. Excellent location, fine craftsmanship, and plenty of space… it’s worth spending a few extra dollars in my opinion.”

The monthly payment differential

Now no one is suggesting you go out and buy twice the house you can afford. Banks wouldn’t allow that to happen anyway—at least not without a massive down payment. But upping your budget to account for a better location, a larger floorplan, and the kind of amenities that cater to your upscale tastes can make a huge difference without causing financial ruin.

Consider this:

Principal and interest (P&I) on a $200,000 house at four percent is $954.83 per month. Raise that budget to $250,000, and the P&I goes to $1,193.54. Will that $50,000 make the difference between a starter home and a dream home? Maybe not. But in a first-time buyer market, it can greatly improve the location, the space, or both, and all for $238 a month.

P&I on a $400,000 house at four percent is $1909.66. Opt to buy a $500,000 house instead, and you’ll pay $2,387.08 per month. The $477 increase in your monthly payment can make a world of difference in the house you buy, and how you feel about it.

Home ArrangementDon’t go house poor

The term “house poor” sounds awful because it is. If buying the house you want is going to leave you eating ramen and stealing your neighbor’s cable, don’t do it. But if we’re talking the difference between sandwiching it a few days a week at work or going to a Saturday matinee to see the latest blockbuster instead of a Saturday night outing, that’s not much of a sacrifice to love your home.

Money Under 30 makes a solid argument for millennials buying their “forever home” instead of a starter home, but anyone in any life stage can strive for more if they’re willing to make it happen.

There are 1,000 ways you can cut to make room in your budget for the home you want. Here are a few that will make an impact.

1. Eating out

A night out in a restaurant is not a novelty. In fact, “Sales at restaurants and bars overtook spending at grocery stores…for the first time ever, according to Commerce Department data released Tuesday that dates to 1992, as reported by Bloomberg.”

Cheltenham Short BreaksSo just how much is that? More than $6,000 a person for the average American. Wouldn’t $12,000 make a nice addition to your down payment on your dream home?

According to Forbes, “Americans go out for lunch on average twice a week and spend $10 each time. That means they’re spending $936 annually.” Between two adults, you just found almost $2,000 a year just by bringing your lunch. Will that buy you the estate with the view? Nah. But it’ll get you closer to a home that speaks to you instead of the safe, conservative choice that makes you want to cry.

2. Trade in your car

You don’t necessarily need to get rid of your fancy ride—although it might not be a bad idea to at least consider a model lower if that house is really important to you. You could negotiate a trade for a newer model at your dealership. If you’ve been making your payments on time, you might be able to take advantage of a lower interest rate or a program reserved for preferred customers. Or, if you are currently financing your car, consider leasing. Payments are generally lower, and you might even get an upgraded package out of it.

Fotos de CarrosOr, buy a hybrid. There’s a couple hundred dollars a month in gas you no longer have to buy right there.

3. Sell some stuff

Antique furniture sitting in the corner of the garage, old electronics collecting dust in the attic, and old handbags you’re never going to use again can make you money. Check sites like Huffington Post and Country Living to get an idea of the worth of things like antiques and collectibles. Other things might be eBay worthy. Mashable has a list of the “9 Valuable Things You Didn’t Know Are Lying Around Your House.” (Pokemon cards? Really?)

4. Crowdsource it

Have a birthday, wedding, or anniversary coming up? Let your loved ones contribute to your down payment.

Need more ideas? The Simple Dollar has 100 – yes, 100 – more ways you can cut back and save money. Soon, that dream house will ne right around the corner!

About thenoelteam

As a Broker with RE/MAX Alliance, I work energetically for my clients whether they are a buyer or seller. I help you achieve your goal of owning a home or getting the best price for your home in the shortest time possible. After graduating from UCLA with a degree in communications and finance, I was licensed in 1977 and since then I have sold over 3600 properties amounting to over $1 billion in sales. I currently rank in the top 10 in home sales for Colorado. I offer the same quality of service and superior communication to all clients, ranging from starter homes to multi-million dollar estates, commercial and income properties, relocations and foreclosures My goal is to provide you with the best representation possible whether you are buying or selling. Over the years, one of the things that I've discovered is that there is a difference in the way individual Realtors do business. For me, I have always felt that honesty and personal integrity are the foundations upon which a successful business and career are built and sustained. I have an extensive background and knowledge base in real estate, including financing, which has enabled me to provide outstanding, quality advice and service not found with many agents today. My commitment to communication creates a positive relationship between my client and myself that results in a successful property sale or purchase. My passion for real estate, commitment to my clients and personal integrity has helped me to achieve success placing me in the top 1% of all brokers in nationwide. In my career, I have earned a number of awards and received considerable recognition for my success but the most significant recognition comes from the fact that over 75% of my business comes from past clients. My success is a true measure of my client satisfaction.
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