Updated on 04.18.07

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

Trent Hamm

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.

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  1. Must be a really hard decision, Trent.

    Are there any other areas where you could cut to free up the difference in money? I suspect you already have cut where you could cut, but maybe there’s a sacrifice that you could make somewhere that would be more than compensated by having your “dream house”.

    Chances are, that sacrifice will be temporary (next 2 years, as you say).

  2. Justin says:

    You know the way the market is right now (at least here in Sunny San Diego) 50k less than the offering price may not be too hard to negotiate. Many 1 bedroom condos in my area have been on the market almost a year and dropped nearly 100k! In 6 months they may be happy to sell to you at your top price.

  3. GHoosdum says:

    Good luck, Trent. If this truly is your dream home, I hope that you can swing the numbers in your favor.

    In my opinion, since the home is where you will spend the majority of your non-working hours in your life, it had better be one that you enjoy living in. I wouldn’t settle for second-rate just to save a few bucks a month in payments.

    Also, shop around when you’re looking for your mortage. Some reputable lenders will give you a fixed rate loan on 85% or even 90% LTV without PMI and you won’t have to worry about splitting it into multiple loans.

  4. kev says:

    Boy, that’s a tough one.

    I’ve experienced something similar, and my advice is this:

    Remember, the “upper number” you could afford was decided on for a reason. If your situation has changed and you can realistically afford more than you originally thought, great. But be honest with your self. Almost as important, remember that there ARE other houses out there. You might love this one, but it’s possible you could love another one just as well (for $50k less!).

    Good luck with whatever you decide to do!

  5. thomas says:

    #1 mistake in buying a home: buying with your heart. Pages and pages have been written about this, think about financial stress while living in your dream house…not such a nice dream after all.
    I know the american way is “debt for dreams” but it looks like your getting suckered in to stretching too far,remember,kids are expensive, writing is difficult, accidents happen, real estate taxes rises.
    I don’t want to sound like the grinch here but if you’ve set your rational limit stick with it, or to ask in a different way : if you’d set a stock investment limit would you over rule it based on pure emotion? A house is an investment.

  6. Eli says:

    One piece of advice (admittedly anecdotal) that we used when evaluating our house purchasing power was the idea that the mortgage will be pretty tight for the first couple of years, but as time goes on:
    (a) surrounding rents will increase but our mortgage won’t, so the “pain” is temporary. In ten years, when you’re paying a fraction of surrounding rents, your purchase will seem like a deal.
    (b) we’ll get a hefty tax deduction (we always used to pay on our taxes, this year with baby and house we received $2k back…guess I should change my W4…)

    The tax deduction is particularly nice, because most of the first few years of your mortgage payments are interest — so essentially a significantly large part of your housing costs are tax deductible.

    Here’s another question: How does resale value of this property compare to other properties in your previously mentioned price range? That would factor significantly into my decision. “They” say never buy the nicest house on the block…

    Of course, the bottom line is: can you make the payments? If you can’t do it from the start, it really doesn’t work — especially since you can’t depend on your income going up as you get older. (We all LIKE to think that, but it isn’t a given.)

    Bottom line, the best advice I was given was, “Don’t be afraid of the initial pain…” Buying into that much commitment is tough, but I’ve enjoyed the last two years of being a new homeowner…

  7. KMC says:

    Trent, I think you should probably go for it. Look, you’ll make the budget fit (at least that’s how it’s always worked for us). What does the $50,000 extra work out to in the payment? Something like $200/month. (Easy for me to say, right?)

  8. Erica says:

    Could you make an interim move until the kids are out of daycare – that’s a fair whack claimed back in just a few years time??

  9. Gal Josefsberg says:

    First, I agree with Thomas, never buy with your heart. You set that upper limit for a reason and you need to stick with it.

    Second, Eli, point A you made is incorrect. Your mortgage might stay the same but you’re missing out on the interest your downpayment might be collecting right now. You’re also wasting a lot of money on paying the interest on the mortgage.

    I’m not saying that renting is better than buying, only that it’s never as clear cut as saying “rent is like throwing money away.” In many real estate markets, renting is indeed as good or better than buying, especially if you have a good investment to put that money into. In other markets, buying is better.

    One of the articles Trent linked to last week was a good read about this very topic. I think it was in queercents. It had some handy tools to figure out whether buying was better than renting in your particular market.

  10. joey! says:

    I hope it works out for you either way, Trent.

    In situations like these, I think of two things. There’s one quote from Buffet that goes, “I’d rather buy a fantastic house at a fair price than a fair house at a fantastic price”. (He actually was actually talking about companies, but I think it works in your situation too.) Sometimes I get too caught up in finding a deal that I forget to pay a good (ie., fair) price when I see it.

    Or think about it this way – if you didn’t buy it, will you always regret not buying it? I don’t know how long y’all have been looking for a home or how frequently the “dream home” sensation comes over you and your wife, but I think it’ll be worth it if you’ll really be upset to let it go. On the other hand, if you wouldn’t really mind, then it’ll probably be worth it to keep waiting.

    Finally, as an aside, just saying it’s $50k more than what you wanted is hard to gauge. I can see $50k being 10% more than you wanted to spend, or 25% more. It’s kind of hard to see how big a deal the $50k is, know what I mean?

  11. Robert says:

    There are a lot of details that are not known from your article. This may not apply at all, but it is why my wife and I were faced with almost 3 years ago.

    What length mortgage are you looking at? My wife and I wanted to get a 15 year mortgage, but knew that we would be unable to afford a 15 year mortgage the first year or so due to my wife being a full time student and therefore not having a full time job. We wanted to get a 15 for the lower interest rate and the ‘forced’ payback rate.

    I ran the numbers and noticed that if we got a 30 year loan, but made 15 year payments, it added less than 2 years onto the end due to the half percent interest. We decided that it was worth that to get a house now (our renting situation had gone downhill) and then increase the payments when we were able. We could make the 30 year payments on only my income, but it left little wriggle room.

    But circumstances can always change and they always influence decisions. Three weeks (literally) after we signed for our house, I found out that my company was sold, and I would be out of a job within 12 months. At that time, I/we were seriously questioning buying the house – but there was little we could do about it. In the end, things turned out well and I am glad we did it.


    A little over a year ago, my parents were thinking of moving out the country. They found a house the liked, and decided the owner was asking too much for it. So they made a low offer, and the owner said no. About 2 months later, the owner of that house called my parents back and asked them if that offer was still good. Never underestimate the power of making an offer.

    When we bought our house, we got it for less than the asking price with all the appliances and living room furniture included because we made an offer, told him that was as much as we would spend, and eventually he said sold.

    If you and your wife can squeeze out a little more money do it and make an offer. Be honest and tell them you want the house, but you can only afford x. You never know. A couple did that to my grandmother, told her they really wanted her house because they loved it, but they could only pay x. My grandmother went ahead and sold it because she wanted someone to live there that could enjoy it as much as she and my grandfather did before he passed away.

    Moral of the story: Make an offer of what you can afford, but only what you can afford.

  12. avlor says:

    I also agree with Thomas, Gal and Kev. You chose the number for a reason.

    I wanted to buy a larger more expensive house, but I’m glad my husband and I stuck to our guns. Every one always tells you you’ll make more money later, and assumes that no hard times come. Before my second child was born hubby’s company insurance changed from a few hundred a month to quite a bit more than our house payment. We were in shock! We went to private insurance for a while – but that was still darned expensive. (Don’t even get me going on private insurance – I had bad experiences with it) Things happen. But if we hadn’t stuck to our guns I’d be back at work, and NOT wanting to be there yet. You might very well find a house you like for less.

    (Hopefully you’re not in an area where people put a house for sale at one price and expect more for it and get many of bids higher and chose the highest one. That’s what it was like in Phoenix when we looked at moving there.)

  13. Alex says:

    So, simple calculations based on the data you gave us here tell us that the house you are considering is $200,000, but you are willing to pay up to $150,000. Correct?

  14. Lifeguard says:

    Get your numbers in order first, and then Make An Offer. They may need to sell and that $50,000 may come down a good bit. You never do know what they may do until you make an offer.

  15. Eli says:


    Good point on the interest. When we bought (as I said, this was anecdotal advice at best), we actually had no down payment, but we live in a rural area according to the USDA. They provide excellent “rural development” loans to first-time buyers, directly comparable to a standard 80% loan but without the down payment. (And only a 1% fee as a “mortgage insurance payment”, which can be rolled into the loan. No monthly PMI!)

    Long story short, I didn’t have the down payment interest tradeoff you mentioned. Just the closing costs, which mostly were written off because of paybacks we got from the sellers on post-offer inspection issues.

    As an aside, for anyone in a rural area (which sometimes is a loose definition), check out the USDA’s “rural development loan”. It was a great deal. We live in university town in the middle of nowhere, so the living is nice, but defined as “rural” by the govt. Very helpful in the loan department…

  16. Flexo says:

    I agree with Lifeguard. Also, you only live once, and if this house will bring you and your family joy that no other house can bring, that may be worth more than money. LIFE is not about making every decision purely about numbers.

  17. Goldie Katsu says:

    I would make an offer at what you can pay – and write a love letter. When we made an offer on the house we also wrote the seller a letter talking about what about the house makes it the ideal house – why you love their house. It can make a difference, and it may be that they would bring the price down for you. It isn’t always the highest bid that wins.

  18. Debbie says:

    I think most people would agree that you should have a house you love. And most people would also agree that you shouldn’t stretch your entire budget–for decades–just to buy one thing. But you cannot do both, so how to decide?

    What is better about this house than the house you’ve been imagining you’d find? Mostly you mention space. Would the extra happiness you’d get from this house exceed the extra headaches you’d get from the higher cost? Have you ever had this much extra space and thus do you even know if you would be happier in more space? Could you use that extra space to make extra money (get a roommate or host paying events or store things for people or rent it as an office or cook meals in the fabulous kitchen to sell or get more babysitting gigs or open a daycare, etc.)?

    My vote, based on the information you’ve given, is to look for a smaller well-designed house or a smaller house that would be easy to add on to. Right after you offer $50,000 less (just in case he takes it).

    Good luck! It’s so exciting!

  19. Amy says:

    Negotiate! Think about what you can offer in exchange for a lower price. Can you buy immediately? Can you be flexible on the move-out date for the owner? If there’s a real estate agent involved, can you get him/her to reduce their commission to make the deal happen? Also, negotiate aggressively on the points and fees on the mortgage – I know people who work in the industry and they say that the first offer is almost always negotiable.

    Good luck making the numbers work.

  20. D says:

    I am assuming your credit score is good, since you see no issue with obtaining a 80/5/15.

    If I had my sights on a home with this same issue, I would first, speak with the owner of the home currently. With this market, he may not get it sold, by realtor. Tell him you are interested and if no one puts in an acceptable offer prior to the end of his contract with the realtor – he should call you. I would also put a bug in his ear about splitting the commission saved on the realtor. This could eat up a portion of your difference.

    Next, leave it to God or fate what ever you chose. In the mean time, scrounge up some extra dollars where ever you can to help increase your down payment amount. Don’t forget to get a date from the seller of his contractual obligation end.

    Then, I would look at my numbers and see my short fall. Apply for some 0% Interest credit cards, only because you have a risky 2 year window, this is a short term free money. DO not apply for too many, just to get some extra cash flow. Don’t want to hurt the credit score with a mortgage pending.

    Finally, if a gap is still there, it will be smaller. I would then look to the seller to hold back a second, making some extra cash on his equity.

    Mostly, time is the determining factor. How much time do you have until the contract is up? Can you scrimp and save enough to make the deal work? Can you squeeze in a side income until closing?

    Depends, how bad you want it. I do not recommend, acquiring mortgage payments above your max. I do recommend looking for lower cost ways to increase that down payment.

  21. martha in mobile says:

    You need to see comps before you know what the house might actually sell for — sometimes the asking price is more of a “wish” than a realistic price. Our final price for our home was 15% less than the asking price.

  22. Rebecca says:

    What about the possibility of moving closer to your parents and in-laws in the next few years? Is it really wise to buy a house now if there is any chance of this happening that soon? I’ve always lost money on real estate because of moving too quickly after a house was bought.

    I’ve also always bought more than I could afford. And I can tell you from personal experience that my family was never any happier living in large gorgeous homes than when we were renting various condos and townhouses. In fact, I was always much more stressed out when having to pay for the higher standard of living.

    Additionally, in my experience, owning a home always costs much more than anticipated – certainly much more than just the mortgage, even when that payment includes taxes and insurance. My advice is not to even come close to stretching things but, rather, try to get as far under your budget as you can. The peace of mind will be worth it.

    I can’t stress enough that my kids were every single bit as happy when we lived in a 1200 sq. ft. rented condo as they were when we lived in a 3,000 sq. ft. country club home. And I was much more carefree before saddling myself with so many extra expenses.

    Another thing is that my house was custom built to my specifications, so it couldn’t have been more “perfect” for me. By the time I sold it, though, I was so happy to be rid of the burden and had no love left for it whatsoever. It was the last time I made the mistake of paying just a little too much for my homes, but I have to admit that it took me three times for the lesson to stick.

    And, you know, Trent, you’ve spoken often of being a man of faith, so I’ll add one more observation. This strikes me as being one of those major life decisions thrown at us that we don’t realize how important they are and how much impact they’ll have until looking back years – or even decades – later. It smells a little bit like temptation to me. If I were you, I’d pass.

  23. chris says:

    NO NO NO…DO NOT go over your budget, yeah, $50,000 may only be 200 a month, but what about buy less house and putting that extra to work for you and your family.

  24. PJA says:

    Offer 30 K less than they are asking and put a few k in earnest money down. Then turn around and only put 5% down and keep the other 10% as emergency money (you never know).
    If you buy a house just because it’s cheap you may miss out on the appreciation potential of a house that’s actually nice.
    If you aren’t pre approved for a loan then you aren’t ready for it. There are millions of houses on the market – no need to rush – there are many models just (in fact exactly) like it.

  25. Mary says:

    I would do a little research into peak oil. Go to http://www.lifeaftertheoilcrash.net. The reason I say this is because we are about to embark on high energy costs, which will definately affect our pocketbooks. If indeed we do see soaring fuel prices and a jump in prices for natural gas, food, goods, ect….will you still be able to afford this house? How much does it cost to cool and heat and with the price of goods increasing with a new baby, do you have the wiggle room to handle all that. I love your site and have learned alot. I believe all of us are going to have to start to simplify our lives in the years ahead due to this energy crisis. Please check out the site. It is run by an enviromentalist attorney out of California. Great information there!

  26. Lisa says:

    Amy is right. Negotiate! 200,000 could be a starting point for negotiation or they might accept. If they say yes to 200,000 you are where you want to be. If it falls through, you know you made the effort and it just didn’t work out. If negotiations stop, let them know they are welcome to contact you in the future if they don’t get a better offer. Also, look at the costs associated with the house. What are the utilities? How much will your taxes and insurance(car&house) be if you pay the 50,000 more? Have you considered the tax implications, $1000 tax credit for the new baby plus the additional personal exemption and mortgage interest deduction/property taxes deductions? Unless you like living on the edge, do not bite off more than you can chew. You are already about to add a second child, that will be challenging enough. That said, if you do it, have a back-up plan you can live with if the costs are to much. Like one reader commented, would you be willing to rent out a room, the basement, or the garage(if you have one)? Could your wife tutor if needed? In two years, your expenses will be less, childcare/diapers/ect. Could you hang in that long? Some of this is numbers and some is lifestyle preference. You and your wife have to find the balance you can live with. Best wishes!

  27. Ian says:

    I want to second what Goldie Katsu said, and say make the offer for what you can afford, and write a love letter.

    My grandmother is in the process of selling some property that she’s had for most of her life. While the property is worth quite a bit just for the lumber on it, she doesn’t want to see it logged. Right now, she’s strongly considering selling to a new family that wants to live there and bring their children up in the house in the woods, even though they can’t offer as much.

    The owner of this house may be motivated by more than the bottom line. And if you offer what you an afford, he might just say yes!

  28. Ralthor says:

    Is now really the time to by? At least in my area it seems like prices are way way inflated and the houses are staying on the market for 6+ months. My sister just bought a house that had been on the market for almost a year. Make a lowball offer, either they take it or they don’t or maybe in a couple months they decide its the best they are going to get.

    I don’t see the housing market making any substantial gains over the next few years, which makes it a bad investement if you aren’t sure you are going to be there a long time.

    Now is definetly not the time to be buying a house you can’t or can barely afford.

  29. If your numbers don’t convince you, here is another calc to run. How much will you save in 1 year by NOT buying this house. You will most likely find that waiting 1-2 years will make a big difference in your financing… and your blood pressue.

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

  30. Never Again Debt says:

    MAKE AN OFFER 75K LESS THAN THEY ARE ASKING. You’d be amazed at what could happen.

  31. Sandy Fleming says:

    My husband and I bought our home based on what we could afford on one income. I wanted to be able to sleep at night with no worries about what could happen. It is a small but beautiful home. Right after we purchased it the home values in our area went flat then they went down down down. It took a long time for the value of our home to return to our original purchase price. We never ever had a problem meeting our mortgage payment. There can be very large expenses related to owning a home. For instance last year we had to replace the roof to the tune of $5000.00. I have never regretted the decision to buy a home that was below our means. Think very hard about buying more then you can easily afford on one income.

  32. peter says:

    Been reading your site the last few weeks – fantastic!

    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:


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

  33. jake says:

    I agree with those that say negotiate to try to knock the $50K off and I also agree with those that say if it doesnt fit dont go for it.

    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.

  34. James says:

    And, as several of our friends have realized, utilities tend to climb a little with a house… maybe this one is a smidgeon bigger than your “budget”ed house… is an extra $50/mo for electric, extra $35 for water/sewer, etc. all in the “we can now afford it” gray area as well?

  35. Kim says:

    When My husband and I were shopping for our second home both my father and father in law encouraged us to buy as much house as we could possibly afford, to go the very top of our limit as it would be a good investment. We bought with the intention of staying until retirement and folowed their advice. Huge mistake. Houses are expensive, which we knew fro our first home ( however our first home was divided into 2 apts so we always had renters and therefore income.. ) The taxes, repairs, paint etc all cost way more than we had anticipated, so did finishing the unfinished spaces to make them usable. We were spread way too thin with a top mortgage payment and I ended up going back to work part time. It has been stressful. If I had it to do over again I would have looked longer and saved more and also found a place that had an excellent inspection with finishd spaces. I do like our home and we are able to stay, but I lost my stay at home mom status and that’s been a bummer.

  36. fiveberries says:

    I’m willing to bet that if you looked at more houses $50K over your top price, that you’d find a lot that were “perfect.” Before you even consider making an offer on that house, look at comparable houses, just to be *sure* it’s your dream house. I could find lots of perfect houses for that much more than my budget.

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

  37. Doug says:

    I would wait a few days and maybe force yourself to visit at least one more house. The smartest financial move my wife and I ever made was buying less house than we could afford. We were able to pay off the mortgage in 10 years. Not having a mortgage is a truly wonderful feeling.

    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.

  38. zen says:

    A “love letter” is kind of a bad idea IMO. You’re making it clear you *love* the house, but then you’re trying to use it to pull them to a lower number – but in saying you “love it” they know they could pull you higher than you want.

    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!

  39. Micah says:

    I wouldn’t sweat passing up the house that calls to you if the numbers aren’t right. By a twist of fate, I’ve shopped for houses twice in the past 4 years, and I probably ran into 5 or 6 houses that I just absolutely loved. In fact, I bought two of them, at fairly good prices. And I can honestly say I don’t spend any time at all thinking about the houses that got away.

  40. Dawn says:

    My husband and I ran into this, we gave up the house and a week later found a great house for $30K less. 4 months later, my husband lost his job and we lost 1/2 our income for 3 months. We were still able to make our mortgage payments, car payment, etc. because we had the less expensive house. And my husband was able to take a job that paid less initially, but he loves and will in the future pay substantially better because we weren’t budgeted so tight. I am so thankful every time I make my payment that we didn’t go with something more expensive.

  41. Henry @ Binary Dollar says:

    I think the 30-day rule could apply here. I mean, it doesn’t necessarily have to be 30 days but give yourself a few days and shop around and if you’re still as passionate about the house, then you might need to consider the 50k+ for a home for your family.

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

  42. Depends, are you trying to stay with a 15 year fixed? Can you afford the house with a 30 year fixed at $50k higher? If the answer is yes, I’d buy it. Then if you want to pay it off faster, make the 30 year payment into a 15 year payment.

    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?

  43. betsy says:

    There are always going to be other houses no matter how ‘perfect’ this one is. Don’t let that sway your decision making. You might keep looking and find something even better.

    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!

  44. Alliya says:

    When I was growing up, I saw my parents constantly struggle to afford our house. During the course of my childhood, we moved several times in order to downsize. It caused tons of stress on my parents, and seeing that stressed me out too, even as a child. My parents didn’t save money or prepare for retirement, and as an adult I continue to worry about them.

    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.

  45. paula says:

    Making a home purchase requires using both the head and the heart. And it requires knowing yourself well: Determine what the balance of head and heart are for you.

    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.

  46. Tiffany says:

    I think it’s great already that you have set the parameters in which you will in fact walk away from this house. Given the fact that you aren’t afraid to lose the house, I don’t see any harm in offering them what you can realistically afford to pay for it. Worst case scenario, you don’t get the house!

  47. Melly says:

    Oh my Gosh, Trent! I just read your Armageddon posts, then I read this one and I couldn’t believe it was written by the same person!

    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.

  48. pfodyssey says:

    Well, I’m not sure I can add much to what has already been said, but I really enjoyed this post. In particular, I’m going through a very similar situation and everyone’s comments have really helped. Although I was certainly not the intended recipient of your advice – THANK YOU.

  49. partgypsy says:

    I think you need to go review your thought processes of why that figure was the top figure in your calculations. If you go beyond that figure, you are losing the comfort/benefits of the lower figure which will impact your quality of life, and maybe even financial security. Will the house make you that much happier you can afford to lose those benefits?

    I also agree to give the owner your top price and sticking with that. Don’t make it laughable, make it what you can really afford but not insult the owner.

    It could happen. The same thing happened to my parents, found their dream home, but it was 10K more than could afford (alot back then). Met with owner, sadly explained predicament. A couple weeks later the owner called back and gave them the news they could have the house at that price. Unfortunately in the meanwhile my father decided to take the house money and invest it into a business, so they had to say no to the owner and my mother had to wait years before moving into a house (with 3 kids under 5 in a crummy urban apartment no less).

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