Advice for homebuying


#1

Hello-

I am posting this here because it is of a personal nature and I need some feedback. I really don’t have anyone else I can turn to for advice because I don’t want to disclose this to friends and family…CAF is my kind-of “anonymous” friends and family…:wink:

But anyway, my DH got a job transfer out of the Bay Area which allows us to move closer to family, a true blessing, we are so grateful.

We are moving where housing is more affordable and are hoping to buy a home! Though we’ve been homeowners in the past, we’ve been on the move a lot for DH’s work and have little to put down plus no equity since we’ve been renting here in SF. On the plus side, we do have some for a down payment and closing, plus DH’s salary will support a mortgage and we should get good financing.

The problem is, with a lot of marrieds, we have differing opinions of how to handle money.

DH wants to buy as much home as we can possibly afford, he is tiring of moving, we have a growing family, and the possibility of needing to move MIL in with us sometime in the future. He is looking way ahead into the future, wanting to buy the home we’ll be in “forever”.

I however panic at the sight of the possible monthly mortgage payment he proposes since it is at the ultimate max, and may even be a bit more than what we pay now, waaaay above the nat’l average for mortgages. He thinks that since we can technically afford it, and keeping in mind his potential lifetime earning potential, it will just get easier and easier to afford it, we’ll have all the house we’ll ever need, and never feel the need to “grow”.

I just feel that it is extending ourselves too much and that it is just prudent to live below our means if possible, relying on God to provide a home that would suit our needs, and not spending to the limit that is possible knowing the future holds all sorts of unexpected surprises.

I just want to do what’s right, wise and prudent. He does too. We have differing opinions and it is causing us a lot of grief. I don’t want to be unreasonable, and am wondering if maybe I’m being too cautious? Because of the tension and fighting over this, I’m beginning to second-guess myself but he’s open to my POV and willing to rein in his expectations. What do you guys think is prudent??? Am I being too unreasonable to insist on buying less house even though we will be having more kids and possibly my mother??? Help…I really need some perspective.


#2

we were advised when we bought our second home (not our first starter) and we advise our daughters and young friends the same: buy the most house you can afford, and stretch a bit if you have to. This assumes you have done your homework on location and the house itself, location is essential micro and macro. Get your finances in perfect shape, pay off all other debt except possibly student loans (which should be consolidated) and car payment. Try to amass enough downpayment, which is were help from relatives should go, so you don’t have to pay mtge. insurance and qualify for a lower interest rate. Don’t make decisions based on fear, panic, anxiety, false expections, unrealistic hopes, what if scenarios and the demands of other family members.


#3

I live in California so I know there really aren’t any inexpensive locales. But some are still less expensive than others.

Keep in mind that if you are renting now you will probably be able to change your tax withholding when you buy a home so you can take home extra money. Of course you’ll also have to figure property taxes, insurance, and maintenance along with the cost of a mortgage. But then you have to do that no matter what size home you buy.

I think I understand how you feel since my husband thinks the same way as yours. It was tough for a few years because it felt like we were a family of paupers living in a castle we could barely maintain. But we did already own a smaller home. I think if you live in an area where you know housing will (eventually) go up you are best off to buy something, even if it’s not what you really want.

I think you both need to sit down seperately and figure out how you foresee spending your money on non-housing matters. Then you can get together and see if either of you are willing to compromise in the shortrun to get a better home.


#4

I,too, was always told to stretch–which we have for each of 5 home purchases. It has been almost without exception best money making venture of all our investing strategies. The other advice about buying real estate, that the 3 most important considerations are location, location and location, is also true and has everything to do with protecting and growing the value of your investment. Good luck!


#5

**What about a compromise? More house than you think you can afford but less than hubby wants to spend?

Also, since your needs aren’t large, yet, what about a house that could be added on to?

Hubby and I bought our home almost 8 years ago. We were in over our heads. We needed my parents to buy us groceries…we were that “house poor”. But we really couldn’t have bought much cheaper without getting into a really grubby area and getting a “fixer upper”.

Now, 8 years later, our house has almost tripled in value. But, unless we need to sell, who cares? lol. Plus, if we decided to move, all houses have skyrocketed so it’s not like we’d profit. But I am very happy that we’re in this home. Despite it’s flaws, I can see us living here forever.

Sorry, that’s probably not much help:o

Malia**


#6

I disagree with the advice to stretch and buy the most house you qualify for. Banks will qualify you for a lot, but then you have to pay the taxes, the insurance, and if you put down less than 20% te PMI.

Taxes and insurance can go up drastically in one year. Income may not. Raises and “future potential” are not a sure thing. Accidents happen, people get laid off, you do not want to be in over your head mortgage-wise if any of that happens.

Plus, if you take out less mortgage than you qualify for then you may be able to accelerate your payments, pay it off early-- saving tons of interest-- and build equity.

I bought a house below what I qualified for, but one that more than met my needs space-wise, and then as I got raises and bonuses, I put it towards my house note and paid it off in 7 years.


#7

Your house payment including taxes and insurance should not exceed 30 % of your take home pay. You don’t want the house to own you ! I don’t know if there really is a forever home. You just don’t know what the future holds. But you always need to have good cash flow. Hope this helps.


#8

I have to agree with the last 2 posters. I like what Feanaros Wife said. her house has tripled, but if they chose to move, they wouldnt actually be money ahead b/c everything else around their area has also tripled. I also agree with 1ke. Taxes, insurance, etc can go crazy, not to mention how much extra you could be spending on upkeep, utilities and other misc junk on a bigger house. and dh and I do something similar to what 1ke described with using extra money to pay off the loan a lot quicker. DH and I always pay double the principal which, over time will make a big difference when paying off that mortgage. If youre looking at this as an investment, keep in mind that there are several ways to invest, and a person is much better off to diversify, not put every spare dime into one investment tool. please dont ignore all other financial responsibilities just for a bigger/fancier house. if you have children, have you started saving for college? how about your retirement? is your family covered should life insurance be needed? I should admit that i dont know a lot about real estate, but all of my friends who have done this type of ‘investing’ (buying a bigger house than they need or can afford w/o stretching themselves) , are almost always materialistic in nature and i somehow think that they use the word ‘investment’ as an excuse to get a better house, more than anything (i dont mean to offend anyone with that last sentence). my vote is to buy no more than what you can afford, live modestly, and PLAN to retire when your 50. good luck.


#9

To add to Naomi, the mortgage needs to be a fixed interest mortgage, not an ARM or other variable type mortgage. I would even go so far to say that it needs to be a 15-yr mortgage. And, Amen to those who have proposed that it be balanced with proper retirement and college savings.


#10

I think you should rent for six months or so in your new locale to make sure you know where you want to live. It stinks to get stuck in a neighborhood/parish that you come to find you dislike.

also, If you go with the bigger payment, you should have a larger emergency fund. A six months rental period would help you build a rental fund.

Good Luck.


#11

This is really a tough one – my sister and BIL bought “too much house” and they are still struggling - she is on a STRICT budget every month as far as groceries and other stuff goes…they are really living paycheck to paycheck as a result…

My DH and I bought our house 6 years ago and it was NOT as much as we could afford - it was less, but a good area, etc…it is now worth lots more, and we are refinancing and getting some money back to do improvements, etc…

I like the suggestion that someone gave - to compromise…perhaps less than DH wants but more than you want?? I really think that location plays a lot into the picture, too. It just so happens that we got into an “up and coming” area, and that’s why home prices here are skyrocketing. My sister, on the other hand, is in a nice area and all that, but the housing market just stinks in that area right now…so go figure!

Good luck!


#12

Thanks all for your help - I knew I’d get sage advice!! :slight_smile: My DH and I will talk about it tonight and most likely we’ll both have to compromise somewhere, but it should work out okay in the end.
:tiphat:


#13

I hear you! I am so worried when it comes to money.

If you haven’t already, maybe you could go to a financial advisor and see what he/ she thinks. They can come up with ideas you never would. Plus it’s good to get the advice of a neutral 3rd party. Good Luck! —KCT


#14

NEVER EVER buy more house than ONE paycheck can reasonably afford.
If you are both working, great, but that can change in the future. Don’t be caught short and scared if one loses a job or gets ill or becomes incapacitated all together and the other can not make the mortgage and bills.
NEVER buy an ARM.
ALWAYS have six months of expenses behind you and NEVER touch it.


#15

Just a small addition - if you want some simple sound advice about finances, read the Total Money Makeover by Dave Ramsey. Or better yet, read it with DH and then see what you both feel you should do. Good luck.


#16

DISCLAIMER: The views and opinions expressed in these forums do not necessarily reflect those of Catholic Answers. For official apologetics resources please visit www.catholic.com.