1- Your house is your greatest expense. The lower your house payment is, the more comfortable financially you will be.

2-You are still starting a young family. Do you really think you should have already acquired your “dream home” by this stage of your life? That kind of thing should take time.

3- You have already determined that you can’t afford it.

Trent, I basically went through what you went through, except we were forced to sell our home in 2004 to our greedy neighbors because it started to go into foreclosure. Now, we have rebuilt our credit and are getting ready to purchase a home. The bank told us we could borrow $215k and even more if we wanted. We are buying a home that costs $183k. We have learned our lesson. A house is an investment, but it is also a material possession. And, you work as a writer? I know you are smarter than this.

We just recently bought a gorgeous house after several years of off-and-on looking. It was more than we wanted to spend (30 year mortgage rather than 15), but it was in a great location in town, a large yard with vegetable garden and beautiful perennials, space for entertaining, and everything else that spoke to us. We had looked long enough and knew the area well enough to know that a house like this is virtually unheard of. So we snapped it up. But if we had been unfamiliar with the area, I’m sure we wouldn’t have risked it.

Everyone is different. Know your situation, comfort level, and length of expected time in the house. Also know your school district! Price is critical but not always the deciding factor.

To echo another commenter, as a child I was actually happier living in the small rental house than in the big one my parents owned, because I didn’t have to listen to them worry about money all the time and because my dad didn’t have to work as much. I would much rather have had my dad around than working 2 jobs to pay for a big house.

I am determined not to make the same mistake my parents did. I recently bought a house based on just my income, and purposefully didn’t include my fiance’s income. The house is $40,000 less than what I could technically afford. I’m sure with my fiance’s income included we could have bought 2 or 3 times the house. Sure, my house is small, but it’s cozy and “homey.” I feel completely comfortable and secure in my purchase and that feels really good.

Also note – and I made a HUGE mistake on this – for your first house, don’t be afraid to use a broker. If you get someone good, you can get into deals before the sign is in the yard and the broker might also help to get you a better price. I say first house because I didn’t have to pay any commission to sell – so why not have a broker looking for you.

I had some friends that were able to get into a much nicer house that we did (for the same price we paid) based on the broker getting in there and making the deal before the sign even went up.

The fantastic home you are looking for might be for sale and the sign is not even up yet – you never know!

Good luck!

If it’s tight for 2 years, no problem got the lower payment. But if it’s doable, then also awesome.

That would be the selling point. What is your mortgage?

I’m with Flexo on this though. This is for your family and in that case, it isn’t always about numbers.

You set a budget within reason – and it’s better to plan your *house* payments based on your fixed, educated, present income – not your estimated future income – what if this blog doesn’t last? (No offense, but we’re doing “What If”) What if you’re loved ones get sick? Unforeseen expenses can wipe out your anticipated estimated future income, leaving you scraping to get your mortgage payment together.

That being said – are you going to retire in this house? Never move again? If you are planning on living out your days there – then that is something to weigh in on (but remember, the sub-prime fiasco is based on people buying more then they can afford with the idea they can always refinance/stretch their payments).

Lots of factors to consider – good luck!

However, I do agree with several others here that it never hurts to make a low offer. Our house was listed for 139,000 (13 years ago) and our first offer was 68,000. We eventually settled on 90,000. The best thing about using a realtor is that you don’t have to negotiate face to face.

Remember, all realtors are working to make a deal happen for the highest price possible. Never, reveal your true highest possible price to your realtor, buyers agent or otherwise, or that is what you will end up paying.

I agree with the previous posters that cautioned you against buying with your heart. Sorry to be such a downer.

Sure it’s your dream house, but if you buy it and its over your limit it can become a nightmare. There are many homeowners out there that have lost their house and they will tell you that it was their dream house. They will tell you that they threw caution to the wind and bought it thinking that if its soemthing they love they’ll find a way to pay for it. Yet that very thinking cost them their home.

I also have a question as to why you chose 2 years? I think that The Simple Dollar has the momentum to go that long, what I am concern about is 3-5 years down the line. I think you should look further along than just 2 years, unless you have something specific in mind.

Now, regarding the house, are you aware there’s an EPIC housing crash underway? I, as well as MANY other people, believe that anyone who buys a house today is a complete fool. We sold our house late last year and are happily renting, sitting out the coming catastrophe (no, I’m not exaggerating). Here’s some great reading regarding the housing bubble:

http://patrick.net/housing/crash.html
http://housingpanic.blogspot.com/

P.S. Don’t trust a realtor – they’ll ALWAYS tell you “Now’s a great time to buy!”

I’m doing the same calc. 4 vs 5 years. For me it will make a difference of about $30k