2007-01-21 03:46:10 · 9 answers · asked by Brooke22365 4 in Business & Finance ➔ Renting & Real Estate
Is there a point at which you should stop "moving up" so to speak?
2007-01-21 03:57:33 · update #1
Absolutely!
It is still sound to buy the most house you can AFFORD. I'm not referring to squeaking into the home and then you eat macaroni & cheese for the rest of your life, or not be able to afford the utility bills.
Do what you're comfortable with financially - only you know that. It is still the best long term investment you will ever make; whether you stay there forever or sell it in 7-10 years.
I am so tired of people that refer to the worst case scenario and tell others what a horrible idea it is. For pete's sake - if you aren't stable enough to know you've got to have reserves, in case of any emergency - that's someone that shouldn't even buy a home, and the reference or comparison by the below "experts" is insulting quite frankly.
Do what's best for you and your own situation.
2007-01-21 03:48:47 · answer #1 · answered by ☼High☼Voltage☼Blonde☼ 4 · 0⤊ 0⤋
It is not great advice now but it was not great advice in the past.
If you stretch and something happens you get caught out. If you keep a bit of a reserve then you are in better shape.
Note that some people will have a significant change in the next year or two (career path - doctor finishing residency, etc) that really does imply a major set up. Hence buying a bit more now and not selling for a number of years can be a plus.
When stretching consider focusing on a 30 year fixed or other loans that will lock in the payments for at least 5 to 7 years. The idea is you do not want interest rate bumps in the early years when you have no obvious income growth.
If you are going to stretch then consider the following.
Would you take a second job for a year or two to make sure you have extra income? Can you really afford curtains, tools, yard equipment, new furniture and all the other things that many moves seem to require? Are you really in a stable relationship, job, etc so that there will be no major changes in area that impact your housing decision? Would you consider 1 or more paying roommates so that the monthly is a lot easier to handle in the early years?
If you are stretching then you have to assume other compromises are part of the stretch.
It can pay off but you have to step up if things are a bit bumpy for the first few months or years. It is a bit of a gamble so know what you are playing with.
Housing markets do go down so be prepared that if you stretch it might not be a financial success. Be prepared to be locked into the house for a while.
2007-01-21 12:58:37 · answer #2 · answered by Anonymous · 0⤊ 0⤋
You need to question whether you want a house to live in or as an investment.
To live in --many people end up with a house that is too big during their old age. So my guess is to have a house that fits your needs at every stage of your life. This may even mean to downgrade.
As an investment---under the current conditions thinking long term is your better bet say 7 to 10 yrs. Historically real estate has been a good long term investment...the years of it being a short term return are gone for now.
2007-01-21 12:08:57 · answer #3 · answered by arome68 1 · 0⤊ 0⤋
Its never been good advice, other than for the real estate salesman.
The papers are full of foreclosure, MANY of which took that advice.
Always buy a little less than you can afford. You can always move up latter if you choose.
Look at the way W. Buffet, S. Walton and other wealthy-healthy people live.
I personally watched dozens of people buy the MOST they could presently afford (against my advice) only to have a modest and temporary decrease in earnings cascade into total financial collapse.
Buy 15 - 20% less than what you can afford. Bank (Invest) the difference and let time work for you rather than against you.
Best wishes on your home search.
2007-01-21 12:06:29 · answer #4 · answered by pcee37130 1 · 1⤊ 1⤋
That has never been good advice...But I will give you good advice
Save up your money so you can put down a 20-25% downpayment, Get a mortgage that allows you to make extra payments and lets you pay weekly instead of monthly.
Make a real effort to pay extra and get the loan paid off.
Then you have options...Either stay in the house or sell it and use it to make a down payment on a better house...If you get a better house, pay it off fast the same way
2007-01-21 12:35:45 · answer #5 · answered by bob shark 7 · 0⤊ 1⤋
Why put your eggs all in one basket and assume that this house that you've put most of your money into for so long is going to give you this great profit when and if you sell it??
Pick a house for you and your family, not the Jones', or the real estate agent.
Do what you're comfortable with.
Best wishes!
2007-01-21 12:19:54 · answer #6 · answered by Josi 5 · 0⤊ 1⤋
"The Most House you can Afford" is a sucker's game - a thing set up by our government, real estate lobby, speculators, home builders, etc. It's bs. Live in a home where you are comfortable. There is no "moving up"
2007-01-21 13:18:23 · answer #7 · answered by Byron W 3 · 0⤊ 1⤋
If you are young, have good credit and a secure job. Your salary is going to continue to rise and your payments (if you do a fixed rate) will remain the same. You spend so much time in your home, be sure you love it!
2007-01-21 11:51:01 · answer #8 · answered by Annie o 2 · 1⤊ 0⤋
Yes when you are happy with what you have.
It is OK to save and do other fun stuff like to Hawaii.
2007-01-21 17:02:17 · answer #9 · answered by Anonymous · 0⤊ 0⤋