Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
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:
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 journalist specializing in financial topics. Read more of her writing on Huffington Post, Wise Bread, AllBusiness, and at her website, Planting Money Seeds. Follow her on Twitter: @MMarquit
The information contained in this blog post is designed to generally educate and inform visitors to the Equifax Finance Blog. The blog posts do not give, and should not be assumed to provide, personalized tax, investment, real estate, legal, retirement, credit, personal financial, or other professional advice. Before making any financial decision, you should always consult with the appropriate professionals who can explain your options, rights, and legal responsibilities, and advise you on any tax, legal, credit, or business implications that may result from those decisions. The views and opinions expressed by the authors of blog posts are their own views and may not be the views or opinions of Equifax, Inc. and/or its affiliates.
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.