5 Signs that You Should Have a Cheaper Home

Buy property insurance to get cheap home loans

Finding the perfect home that doesn’t fit comfortably within your price range can be frustrating. Many home buyers who find themselves in this position often consider maximizing their budget or even extending it beyond the limit. However, this is a gamble that can either go well for you or sink your finances in the future.

 

If you want to avoid biting off a bigger home loan than you can chew, here are the telltale signs that you should choose a cheaper home:

 

  1. The house’s price tag is pushing your budget

 

Say that the house you have your sights on is within your set budget, but it’s around the maximum amount that you have set for yourself. Don’t take this as a signal to make an offer on the house immediately. Remember that there are also expenses that go with buying a home, such as taxes, realtor fees, repairs, and more. Are these fees included in your working budget? If not, you might want to find a house with a smaller price tag to allow leeway for both expected and unexpected expenses in the home buying process.

 

  1. You have little to no emergency funds

 

Anyone who plans to buy a house, whether it’s within their budget or not, should have a good amount of funds saved for emergencies. That said, having little to no emergency funds is a sign that you should wait before buying a house, much less one that is higher than your budget.

 

  1. More than 30% of your income will go to the mortgage

 

A good rule of thumb when it comes to housing is to keep your monthly payments at or below 30% of your income. If the mortgage of the house that you’re eyeing will land more than 30%, buying it can make your finances tight and lead you to be “house poor.” It’s not worth buying a house if you’re constantly worrying about how to pay for it. Hence, find a cheaper home that will fall comfortably below that 30%.

 

  1. You have a lot of other expenses

 

A mortgage will be just one of your monthly expenses. There is also food, utilities, insurance, debts, and other costs on top of it, which increases exponentially when you have a family. If you are expecting your expenses to rise (e.g., with the birth of a child or a parent moving in with you), buying a cheaper home might be better for your finances in the long run.

 

  1. You have other plans for your money

 

Tying up all your money on the house can derail your plans for other investments. So if you have other plans for your money, such as starting a new business or restoring your car, buying a cheaper house can leave more funds for those purposes.

 

Remember that cheap doesn’t always mean low-quality, and there’s nothing wrong with choosing a more affordable house if it means you’re going to live more financially comfortable in the long run.

 

Don’t let your emotions get the best of you when selecting a new house. If you notice these signs, you might be better off choosing a cheaper home. 

Meta Title: 5 Signs that You Should Buy a Cheaper House

Meta Description: While looking for the perfect home, it can be easy to get carried away by your emotions. Learn more here.

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