Finding Your Dream House – And Trying To Convince Yourself You Can’t Quite Afford It

My wife and I have been doing some house hunting in our area lately. We have been watching the real estate fliers carefully and have been driving through nearby towns looking at homes with “For Sale” signs in front. Last night, we drove by a house that somehow just called out to both of us. The owner happened to be in the yard at the time, and so we asked a few questions and were invited in to tour it.

We both fell in love. It is basically the home we’ve both been envisioning for years, in every way. Four bedrooms, a wonderful roomy kitchen, plenty of space for everything we want, an unfinished basement which can be finished in many different ways – in short, just about perfect.

The only problem is, when we sat down and cracked our budget a few months ago to see what we could afford, we set an “upper number” on what we could realistically swing. This house costs about $50,000 more than that.

So we’re stuck in a quandary. Theoretically, if I kept my current job and The Simple Dollar stayed active, we could now afford the payments on this house – even paying ahead a bit. We also have a down payment of about 15% on the house (we had 20% on our “upper number,” but as I said, this home is above that) and we’re pretty sure we can get an 80/5/15 arrangement to borrow the money.

What it boils down to is do we feel safe borrowing that kind of cash? The total amount borrowed would be less than two times our combined household income, but we also have a child, another one on the way, and are still paying off student loan bills.

Here’s what our current plan is:

Tonight, I’m going to attempt to make a model of what I can really expect to earn from my writing over the next two years (that’s the period that really worries us). I am going to drastically lowball this estimate because, honestly, I’m still somewhat uncomfortable with making money as a writer – it’s something new for me.

Once I have that, we are going to make an estimated budget for the next two years to see whether we can actually afford it. Our estimates will be revised a bit from our first go-round, so we should end up with a somewhat higher number than before.

After that, if the numbers say “don’t do it,” we won’t do it. The only reason we’re even looking at this again at all is so that we can honestly tell ourselves that we did give this house a fair shake but we simply weren’t able to get it done.

Any thoughts and comments are appreciated.