How Much House?

Ray’s Take: One of my greatest joys is helping someone plan and reach his or her goal of buying a new home. Whether it’s a first home, a vacation home, a fixer-upper, new construction or an empty nesting home, buying a new home is exciting.


Homeownership is a milestone that took careful planning, preparation, saving and dreaming. I love seeing these dreams become reality for my clients.


Recently, there was an article in the Wall Street Journal that said U.S. homeownership climbed for the first time in 13 years. One reason for this increase could be that our millennial generation is now seeing the benefit of long-term investment in homeownership as opposed to renting or leasing.


So the question becomes, “How much ‘home’ can I truly afford?” Forget all the online tools and calculators that make claims based on your income or how much the bank “says” they will lend you.


When purchasing a new home, the conversation needs to start with the “B” word – budget. Add up all the extra fees, taxes, insurance, required maintenance and homeowners’ association fees in addition to just the monthly mortgage payment. Does your plan demand that your financial lives go perfectly as planned? If so, stop. “Perfectly planned” is not realistic.


It’s important to keep in mind that the transaction costs of buying and selling a home can quickly negate any appreciation on the property and all of the expenses associated with “more” home can slow down achieving other financial goals.


Ultimately, the amount of house you can afford will depend on your personal needs, desires and financial capabilities. Start by writing up a household budget for five years. This should give you an honest picture of how much you have available for housing expenses.


But most of all, have fun. Having a place to call home and making new memories is a part of living the American dream.


Dana’s Take: Wedding vows say to accept a mate “for better or worse,” but does that mean agreeing to move into his or her house? This is sometimes an issue when people tie the knot later in life.


When Ray and I married, he already owned a house, so I moved into his bachelor pad. This was probably a mistake, both emotionally and financially. I renovated that house for 10 years and it still never felt “right.” I learned a valuable lesson.


My friend recently married a man who has worked on his house for decades and would rather not move. The new bride is planning all kinds of additions and renovations. My guess is it will never feel quite right.


Consider starting fresh when building a nest together.


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