We've been looking for a house closer to the beach for quite a while. I've always looked at some homes a little above my price range because they tend to sell for less than the initial asking price.
Recently we went to an open house that was listed at the top end of where I look (a little above my max of what I want to pay.) It had just come on the market. It's a really nice house and the location is amazing! It has an actual ocean view (which does not typically occur in my price range) and is in my ideal neighborhood. They priced it a little low because they would like it to sell fairly quickly.
Even my husband liked this house and the incredible location. We put in an offer (which we have not actually done in more than a year of looking) and received a counter. The counter was more favorable than I expected but held firm to the asking price. There's no question in my mind that the house is worth what they're asking. The market here is just starting to pick up - so I'm assuming that things near the beach will only get more expensive.
We could pay for this house, and we've talked to a mortgage guy and we can absolutely qualify for the mortgage for this house. But taking on this mortgage could make some changes to our lifestyle (belt-tightening!) It is a very good deal for the property which I think will go up in value - but will almost certainly not go down because of the location. I'm just frightened of being house poor.
Is it worth stretching my budget for my dream location?
I went thru this EXACT same feeling. It wasn't over location but over the house. The house was amazing, and we put in an offer for a lower price than listed and they came back with listing price.
After talking it thru with my husband and our lender, we made another counter. But I had the same feeling you are having now. Our payments would have been $200 over what we currently pay in rent. Was it worth it?
My husband said, he would have done 16 hours of overtime a pay period to make up for the $200. Again, is it worth it to count on overtime hours?
In the end, we didn't get the house as a cash offer came in.
To be honest. I was relieved. While it would have been nice to have the house, it wasn't worth being house poor. Who wants to tell friends "NO" when they ask if you can go out to the movies/dinner/etc because you don't have money.
Being house poor makes it hard to save incase you need to fix something, also.
IMO, I would say NO unless there are things you can comfortably cut from your budget. Such as maybe, eating out or can you pay off some credit cards to avoid that monthly payment.
My goal is for us to get a house and still be able to live the way we are now with renting. We have extra money to do things we enjoy, while still being able to save.This message has been edited. Last edited by: Alleria,
I don't know which state but I would think twice about a house that would stretch your budget too much. One thing you may not be taking into consideration is how much more you will have to pay in insurances.
Part of getting the flood insurance program passed for 5 years was a clause that reduces the fed support of flood insurance. The discount is going to decrease each year for the next 4 years. That means we don't know how much flood insurance is going to be costing in 5 years. In addition you will need to have Wind and Hale and for us, on the coast but not ocean front, is about twice our homeowners.
How can you be sure? Unfortunately, nobody has a functioning crystal ball when it comes to the financial markets and RE tomorrow.
Don't know if it's in a vacation home area but their prices tend to be more (or possibly the most) elastic - meaning they tank quickly in a downturn and recover more slowly - than any other type of home.
OTOH, if this is your forever home and dream location, do you care about its future value? (Don't remember you mentioning if it's your forever home.) Do you plan to move or will you hold the property for at least 5 years?
But, remember the rule: location, location, location. If you truly love it, is it worth the sacrifice?
Dolores, this is largely a personal decision, IMHO, between you and your spouse. Is one of you advocating one position and the other vice versa? If things don't go your way, will you resent your partner?
You might want to list the pros and cons, considering the worst case scenario. How secure is your income? Future expenses, e.g. children's college? What about inflation or other increased costs? Can you maintain adequate reserves, e.g. 8 months of expenses or possibly 12 if your income is insecure?
WRT the valuation issue, reviewing this home's price history (and the same for comps in its neighborhood) may give you an idea of how the value will fare if we have another RE downturn.
Good Luck!This message has been edited. Last edited by: SurfNow,
Location is the most important feature. You want the best location you can afford. However, can you easily afford the extra cost each month? Things happen and life gets in the way! Cars break down, kitchen faucets need to be replaced, drains get clogged & you need Roto Rooter, your child needs new school clothes, school supplies, a new computer, etc. Do you have a decent "emergency fund" to cover these unexpected, but perfectly normal expenses? Obviously, not every month will have the same expenses, but are you prepared if something breaks & needs to be fixed? Will you panic if you have to come up with an extra $500 for something? Can you afford eating out, going to the movies, beach, golf or whatever you ENJOY doing too? What if one of you is unemployed at some time? I had all the above expenses, just as an example. If you cannot afford the extra expenses of owning a house easily, then buy a less expensive house. I would never buy a house if it meant I had to change my lifestyle drastically!
Well, Mostly Delores, just to make your decision more difficult, my two cents says to go ahead and buy the place you love instead of "the next best thing."
It's a lot easiest to cut back on spending when doing so enables you to live where you love and want to be. Let us know what you decide...
I suppose living close to the beach gives me a different perspective. I know that coming from another area the expenses of living close to the ocean can be daunting.
I know that an HVAC (required in the south) will last at most 10 years. I know anything out doors will last one season, maybe 2. I also know that our annual wind and hale policy has increased about 30% annually and we now pay about $4500 a year in insurance. That is not something you make up the difference by skipping a few dinners out.
I don't know what cuts you would have to make in your household budget, but if they are things you can live without I would absolutely buy the house. When my husband and I were newly married we found the home of our dreams with a view. We decided to forgo vacations and eating out for as long as it took to be able to afford the house payments. Since we both love gardening and working on the house, those things became our hobbies and source of entertainment for the first few years we lived there. Neither of us has ever regretted the sacrifices we made to afford our "forever" home. 37 years, three children and numerous remodeling projects later, it was the best decision we ever made.
Gee, how lucky you have been, not having any of those emergencies in life that many of us seem to have. For example, this year alone, we have had unexpected expenses in our home for over 10,000 I am blessed because is only money and we can afford it. but nevertheless, the stress of all of this has not been worth it.
I'm so very sorry you have encountered emergencies that have caused you stress. Of course one can never anticipate those kinds of things, but we have always kept an emergency fund for unexpected difficulties. I would never encourage someone to live beyond their means. I was merely pointing out that we can learn to live without the things we think we want in order to have the home we love. We didn't consider giving up annual vacations a problem but for some people that is unimaginable. Since both of us love to cook, skipping fancy dinners out was not a hard thing to do. We haven't exchanged Christmas or birthday gifts but instead put that dollar amount into our household improvement fund. That is our gift to each other and we wouldn't want it any other way.
We decided against this house but we're suffering from pretty heavy non-buyer's remorse right now!
After we went over (and over and over!) all the numbers, it just felt too risky. I didn't want to have to stress about a car breaking down or a cat getting sick. The mortgage rates have really gone up in the last six months or so. The VA rate went up a decent amount just from Friday to Monday!
A house like this is not going to come within spitting distance of my price range again and I'm worried that everything we look at now will be unappealing in comparison.
Thank you all for your perspectives!
Take a breather from house hunting for awhile and take comfort you probably did the right thing financially. Mortgages are creeping up a bit but not substantially. Remember we've had artificial low rates for 6 years. For most of the 30 yrs I sold real estate, I've seen rates fluctuate from 5%-16% and there were always buyers and sellers. Good luck.
Sorry to hear you felt forced to give up on the dream. BTW, was it in a vacation home area? I believe you'll get another opportunity.
I would take a breather, too - unless you need to move. Don't give up. It will happen for you.
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