Finance Blog
How Big of a House Do You Need?
Part of the blame for the real estate crash has been placed on consumers looking to get more “bang for their buck” by using creative mortgage financing methods to afford bigger houses.
While there is plenty of blame to go around for the financial crisis of 2008, the fact of the matter is that before buying a house, it’s a good idea to ask yourself the following two questions:
- How big of a house do I need?
- How much mortgage can I comfortably afford to pay for a home?
The answers to these questions are very personal, and they vary by family. If you are honest about the way you answer, though, you will be less likely to fall into the trap of buying a bigger house than you need—or that you can afford.
How big should your home be?
This is a sticky question to answer. Think about your family and your preferences. My family consists of three people, and, technically, a smaller home than what we currently have would probably suffice. However, we nearly always have someone staying with us. Whether it’s a brother who needs a place to park for a month or two to get back on his feet or a cousin who wants a weekend to unwind, our visitors make a dedicated guest room a necessity for our lifestyle.
Consider, too, the way you spend your time. The three of us spend a lot of time together as a family in the common areas of our home, playing together, eating regular meals, and watching ballgames on TV. As a result, we prefer to have the space in our home taken up by a larger kitchen and family room rather than by bedrooms.
Be honest about your needs when buying a home. Can some of the kids share a room? Do you really need a great room and a family room? Is it necessary to have an entire room dedicated to a home office or can you do just as well with a nook? Re-evaluate your true needs as a family and consider ways you can use space more efficiently. You might be surprised at what you can do in a smaller home—and the savings to your budget from property taxes, utilities, and maintenance can increase your comfort.
How big of a mortgage can you afford?
Of course, you also need to look at what you can comfortably afford when buying a home. When we first began looking at homes, there were lenders willing to approve us for two and three times the size of our current mortgage. We talked about it, though, and decided that we wanted to be comfortable with our payments; we didn’t want to have stretch each month to make our mortgage payment.
Besides, it wasn’t only about the monthly mortgage payment. With the money we would have to spend in higher utility costs, HOA fees, and other expenses, we wouldn’t be able to live our current lifestyle, which includes the ability to do the things we enjoy, such as going out to eat, traveling, and (in my husband’s case) purchasing collectibles.
Another consideration is this: What would you do if you lost your current job? Before you decide to go for a bigger home, think about what would happen if your hours were cut or your income changed for some reason. Would you still be able to make your mortgage payment? How painful would paying the mortgage be if you were living off a lower-paying job or your emergency fund? Right now, my mortgage is less than 1/6 of my monthly income. If my husband or I suffered an income setback, we’d still be able to handle the mortgage payment.
Our home may be modest by some standards, but it is a good size for us, and the mortgage is one we can afford. Before you get the biggest house possible, stop and consider your situation. You might not need a huge house after all.
Miranda Marquit is a freelance writer and professional blogger specializing in personal finance, family finance and business topics. She writes for several online and offline publications. Miranda is the co-author of Community 101: How to Grow an Online Community, and the writer behind PlantingMoneySeeds.com.
4 comments
Leave a Comment
We welcome your interest and participation on this forum, but be aware that comments will be published at Equifax's sole discretion. Please don't use this blog to submit questions or concerns about your Equifax credit report or raise customer service issues. Instead, you should contact Equifax directly for all such matters and any attempts to do so in this forum will be promptly re-directed.
Some other factors to consider when commenting:
- Registration and privacy. While no registration is required to visit our forum, participants wishing to post a message must register by creating an account. All personal information provided by forum members incident to registration is governed by our Terms of Use and Privacy Policy.
- All comments are anonymous. We'll delete your name, e-mail address, and any other identifying information, including details about your investments.
- We can't post or respond to every comment - As much as we'd like to, we can't post every comment, nor can we guarantee that we will respond to each individual message. All questions or comments about your Equifax credit report or similar customer service issues should be handled by contacting Equifax directly.
- Don't offer specific legal, tax or financial advice. All of the materials on this Site are for information, education, and noncommercial purposes only and this forum is not intended as a means of expressing views or ideas regarding any specific legal, tax, or investment advice. While offering general rules of thumb is both permitted and encouraged, recommending specific ideas or strategies regarding investments, taxes, and related matters is prohibited.
- Credit Repair. This blog is not intended as a venue for the discussion or exchange of ideas regarding credit repair or other strategies intended to assist visitors and community members improve or otherwise modify their credit histories, ratings or scores.
- Stay on topic. Your comment should be concise and pertain to the specific post in question.
- Be respectful of the community. The use of profanity, offensive language, spam, and personal attacks will not be tolerated and egregious or repeat offenders will be banned from future participation. We encourage disagreement and healthy debate, but please refrain from personal attacks on our WordPresss and contributors.
- Finally: Participation in this forum may be terminated by Equifax immediately and without notice for failure to comply with any guidelines or Terms of Use. As such, you should familiarize yourself with all pertinent requirements prior to submitting any response through the blog or otherwise. All opinions expressed in this forum are solely those of the individual submitting the comment, and don't necessarily represent the views of Equifax or its management.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.
RSS Feeds
This is very true.You should never try for something you can`t afford,no matter how tempting.Its the main reason we have the housing crisis we have today in the US.Thank the good Lord our home is paid off….
I totally agree with you. I don’t understand why people buy big big houses when they never use all the rooms of the house? Can’t 2 children share a single room? People should buy small homes and save their money for the retirement or children education or for their own. I know some people who want to show off by buying everything expensive. I always think that if both husband and wife earn, then the mortgage amount, expenses should be covered with one persons salary so that the other persons salary can be saved for retirement or kids education or for something what you need.
Buy what you need – NOT what your want.
Warren, that’s great advice. Living within your means is really important. You might want a bigger house, but the extra costs may not be worth it. Thanks for posting.