How Much Can I Afford?

The Yin and Yang

There are a number of different opinions that circulate about “how much” house to buy. The Simple truth is they can all be filtered down into one of two categories:

1. Buy as much home as you can afford.
2. Buy something you can comfortably afford.

The truth is there isn’t a right or wrong answer on this one. There are benefits to both philosophies, but you’ll need to examine your own personal goals against these benefits.

So, let’s take a look at the general premise of each philosophy.

Buy as much home as you can afford

PROS:

The idea here is that you can use the tax deduction and you’ll “grow into it”. This is of course working under the assumption that your family will grow over the years and that the seemingly big home will become the perfect size.

CONS:

Stretching the budget to get the most home you can afford means you’ll have less money left in your budget for other activities or savings. It can be stressful for some individuals to be in this position.

Buy something you can comfortably afford

PROS:

Individuals that promote this philosophy want a comfortable payment to ensure that they have the budget to enjoy other things in life such as vacations, dinners out, or just the peace of mind they get from a comfortable payment.

CONS:

Buying a home that is inadequate in size to save money can also become stressful as the reality of the home not meeting your needs becomes overwhelming.

The Simple Truth:

It is important to note that it’s entirely possible to find a home that fits your needs and your budget. If you’re comfortable stretching your budget a bit, and getting more home is important to you, then you should proceed accordingly. If you on the other hand can’t stand the stress of a large mortgage payment you should proceed down a path that places you in the most home you can afford at a payment that you’re comfortable with.

This isn’t a one size fits all venture.

You need to find the choice that’s right for you. At Loan Simple we are dedicated to providing the tools, experienced counsel, and programs you need to accomplish YOUR goals.