By Elaine Quigley, Realtor, CBR, CRS, GRI, Berkshire Hathaway HomeServices
In this article, Jaymi Naciri shares some reasons why you should purchase the home you want.
We’re told to be practical with our real estate purchases. Be cautious. Be smart. But what if the smartest move is the one that puts you in the home you want, not the one you’ll settle for because that’s all you can afford? Will you work harder to protect your investment? Cut back in other areas to be able to afford it?
The monthly payment differential
Now no one is suggesting you go out and buy twice the house you can afford. Banks wouldn’t allow that to happen anyway?at least not without a massive down payment. But upping your budget to account for a better location, a larger floorplan, and the kind of amenities that cater to your upscale tastes can make a huge difference without causing financial ruin.
Consider this:
Principal and interest (P&I) on a $200,000 house at four percent is $954.83 per month. Raise that budget to $250,000, and the P&I goes to $1,193.54. Will that $50,000 make the difference between a starter home and a dream home? Maybe not. But in a first-time buyer market, it can greatly improve the location, the space, or both, and all for $238 a month.
P&I on a $400,000 house at four percent is $1,909.66. Opt to buy a $500,000 house instead, and you’ll pay $2,387.08 per month. The $477 increase in your monthly payment can make a world of difference in the house you buy, and how you feel about it.
Don’t go “house poor”
The term “house poor” sounds awful because it is. If buying the house you want is going to leave you eating ramen and stealing your neighbor’s cable, don’t do it. But if we’re talking the difference between sandwiching it a few days a week at work or going to a Saturday matinee to see the latest blockbuster instead of a Saturday night outing, that’s not much of a sacrifice. .
Places you can cut back
There are 1,000 ways you can cut to make room in your budget for the home you want. Here are a few that will make an impact.
1. Eating out
A night out in a restaurant is not a novelty. In fact, sales at restaurants and bars overtook spending at grocery stores?for the first time ever, according to Commerce Department data recently released, according Bloomberg.
So just how much is that?
More than $6,000 a person for the average American. Wouldn’t $12,000 make a nice addition to your down payment on your dream home?
According to Forbes, “Americans go out for lunch on average twice a week and spend $10 each time. That means they’re spending $936 annually.” Between two adults, you just found almost $2,000 a year just by bringing your lunch.
2. Trade in your car
You don’t necessarily need to get rid of your fancy ride?although it might not be a bad idea to at least consider a model lower if that house is really important to you. You could negotiate a trade for a newer model at your dealership. If you’ve been making your payments on time, you might be able to take advantage of a lower interest rate or a program reserved for preferred customers. Or, if you are currently financing your car, consider leasing. Payments are generally lower, and you might even get an upgraded package out of it.
Or, buy a hybrid. There’s a couple hundred dollars a month in gas you no longer have to buy right there.
3. Sell some stuff
Antique furniture sitting in the corner of the garage, old electronics collecting dust in the attic, and old handbags you’re never going to use again can make you money.
4. Crowdsource it
Have a birthday, wedding, or anniversary coming up? Let your loved ones contribute to your down payment.
Call me today for all your real estate needs. If you have been thinking about selling, now is the time! We are experiencing historically low inventory. We have many buyers just waiting for good, quality homes to become available. Visit my website at www.EQRE.com. Let my years of experience work for you!
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