When first buying a house, financially speaking should one go very big or go small?

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It seems that people these days go as big as possible (really stretching financially, some so much that they go paycheck to paycheck starting on a 0% down ARM)…is there a good reason to go this route or is the best thing to live within your means and find something smaller?

9 Comments
  1. Reply
    dbuitt22
    November 10, 2011 at 5:45 am

    Go with what you can afford and in your price range.

  2. Reply
    stephanie r
    November 10, 2011 at 6:00 am

    first it should be a small house. then when you have 2 or more kides then get a big house.

  3. Reply
    me1234
    November 10, 2011 at 6:36 am

    it depends on how many ppl there r in ur family……….. if there are a lot of ppl in ur family go big if there is a little family then go smaller because it wont b worth it that there is only afew ppl in ur family and you wnet big……
    -steph

  4. Reply
    catcher
    November 10, 2011 at 7:15 am

    Most sensible thing to do is buy small. Becoz you will not be stretching yourself too thin. Actually you already have answered part of your question.

    The greatest myth is ” now is the time, there won’t be another opportunity like this again.”

    When you play small and safe, you end up a winner. Things will be in your favour for being a little conservative.

    And it is not like you have to win only now, so put all at stake fast. You have to win everyday.

  5. Reply
    dawn18417
    November 10, 2011 at 7:47 am

    Start in a small low maintenance house and then save up your resources so that when you are about 40 you can buy a 200 k house for cash or purchase a really nice one for 500 k with and use 40 percent down payment that you have saved up from living in small affordable house.Buying more than you can afford just to keep up with the jonses is not smart,the jonses are broke.What is the point of bankrupting yourself to make others think you are rich,that is what the babybommer showoffs did and now they are broke HAHAHAHAH baby boomer showoffs can now redefine retirement it is called work till you DIE.

  6. Reply
    thylawyer
    November 10, 2011 at 8:02 am

    The questions are: how much house do you need? and How much house can you afford?

    The answers are not simple. Many first-time home buyers who were lured into plain bad financial arrangements for mortgages (0%, no money down, borrow both the mortgage amount and the down payment, etc.) are now in foreclosure and may not be able to save the house through a Chapter 13 bankruptcy. The legal notices in our local paper for foreclosures sometimes takes up three full pages, and the mortgages are only months old.

    If you are not saving money every week and have not saved up enough for a down payment, don’t fall for the argument that you are wasting money because you are not building up equity. If you gain a huge black mark on your credit record, you have wasted your money on owning a house, because after a foreclosure, you no longer have a house, even if there was some equity in it.

    So make sure your financial situation shows you can own a house, not only for the mortgage payments, but for heat, snow removal, repairs, maintenance, etc., and that you will have the will, time or money to just take care of the property. You can’t just sit there playing computer games or watching TV, unless you have the money to pay people to do the work for you.

  7. Reply
    bathagent
    November 10, 2011 at 8:46 am

    You want to find the right deal. Get the most house you can afford comfortably (payment & taxes no more than 30% of your gross monthly wages).Find the ugliest house in a very nice neighborhood and fix it up. It’s expensive to sell, move and buy a new house just because you will have kids in a few years. Buy the house now that you will need in five years.

    0% down, ARM loans are meant for people who have alot of discretionary income.

  8. Reply
    open4one
    November 10, 2011 at 9:33 am

    If you’re in a high-risk profession, the fact that the house is shielded from a liability lawsuit makes it an attractive investment, if you’re in an area you expect to appreciate rapidly. Young doctors might find it adviseable to “overbuy” for their first home.

    On the other hand, most people are better off buying a home that they can outgrow and either keep as a rental when they upgrade, or something likely to sell quickly as a starter home.

    There’s a variety of ARM loans, including the relatively new Option ARM that lets you pay less than the interest for the first year. That means you might pay $ 400 per month on a half million dollar loan, and owe $ 600,000 at the end of the year. This won’t work out well for most people, but if you’re buying a “fixer-upper” and want to put your cashflow into the house and sell in six months, it might be a wise move. I personally wouldn’t do it, but I’m not skilled with power tools.

  9. Reply
    Haylyn
    November 10, 2011 at 10:27 am

    I’ve been investing in real estate for a while now. My suggestion is to read a book called Real estate riches by Dolf De Roos (its a book out of Robert Kiyosakis Rich Dad series). I’m positive you’ll get alot out of it.

    As for your question…Its best to work according to the rental market, you need to research the rental market in the areas you wish to buy in and buy a house that will cover your mortgage as well as your expenses to maintain that house e.g. rates etc
    For example I bought a 3 bdrm brick home in Christchurch New Zealand a year ago for 158K the rent coming in by the week was $ 412 at the time (I have no idea what it is right now) which more than covers my repayments of $ 411 per fortnight and in actual fact puts money into my pocket. I bought a brick home because its a long lasting material as appose to say weatherboard (NZ is a very wet country). I made sure it was a 3 bdrm home because there is a high rental demand for 3bdrms as appose to 1-2 bdrms – also the 4 bdrm homes were more pricy than I was prepared to spend at the time. I’ve had the house for about a year now, I got it appraised recently and its now worth $ 278K on paper. Do the research and I know it’ll pay off for ya! Even if you’re living in it yourself, just knowing that you can move out and get tenants in (if the bills get a little crazy) to pay your mortgage off for you, allows you to sleep easier at night.

    Your more than welcome to email me if you’re serious about real estate. GL

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