When To Consider Raising Your Home Buying Budget
Setting a budget for your
home purchase is an important decision.
You need to know how much you can afford each month and translate that
into the amount you can afford to take out on your new mortgage. When you start house hunting with that budget
in mind, you may find to your dismay that you are not seeing many homes in the
price range you have set that match your needs.
There are three choices
you have in this situation. The first is
to wait it out, keep looking, and hope the house you want comes up on the
market in your price range. The second
is to compromise and buy a house that is affordable but not really what you
want. The final choice is to look at
raising your home buying budget.
How Much Will It Really
Cost?
The first thing to
consider when you are looking at raising your maximum purchase prices is what
difference it will make in your actual monthly payment. In many cases, the difference may not be as
difficult to handle as you might think.
Pull out that mortgage calculator and figure out what it would cost you
per month to go $25,000 over budget, $50,000 over budget, or even $100,000 over
budget. Sometimes even a small raise in
your maximum price can put you into a whole new class of available homes.
Do You Have A House In
Mind?
So you drove past a house
for sale the other day and fell in love, but it's out of your price range. Take that number home and punch it into your
loan calculator. Can you afford that
house, even if it might be a stretch?
Are you willing to consider making other budget cutbacks, such as on
entertainment, to have the house of your dreams? How important is it to have everything on
your wish list?
If having the right house
is important enough, and the increased price is not going to strain your
finances too much, you can consider going for it. Remember that you can always offer less than
asking price, and hope to get that dream home for a price closer to the
original budget!
A little flexibility is
always a good idea when you start searching for the right house. Sometimes spending a little more will save
you later in terms of property value. It
can also save you from having to move again when you decide the compromise to
save money was not worth it.