Stretching to afford a dream house- would you do it?

[SnuggleBuggles]

My answer has always, always been no. Because of where we live we had no reason to look at houses at the top end of what we were pre-approved for. We, in fact, knocked $100k off of what we were pre-approved for and looked in that range. Well, there is a house that we just love. I have no idea when, if ever, it will go on the market. Could be this year or in a decade+. If it came on the market tomorrow it would be a huge stretch to get it but I suppose it could happen. It would be so hard to pass on the house. So, it made me wonder if your dream house (well, realistic-ish dream) house came on the market, would you take it even if it were way at the max of your limit (or even slightly above)? Or would you take a pass and just accept missing out on the house?

Beth

[egoldber]

No. After living through DH's layoff, when the only thing that kept us from being financially ruined was the fact that we had underbought vs what we could afford, no. No house is worth that risk IMO.

[infomama]

I would pass. Nothing like being house poor to stress you to oblivion.

[Ceepa]

We stretched beyond our original plan but not beyond reason. I have to say ... totally worth it. This house has been a dream to us for the years we've lived here. It has been a joy from day one and all of us will be sad the day we leave. It helps that the location is good and that DH's commute is about 10-15 minutes.

But I would not put the family in any strain to live in a house.

[scrooks]

I really think it would depend on how much of a stretch it is...
If you are talking about cutting down on extras...maybe...but if you are talking about living on dried beans and peanut butter and jelly...no

[ett]

No, I would not want to be regretting my decision later on if it turns out not to be my dream house.

[chlobo]

My SIL "stretched" and is now filing bankruptcy and selling the house on short sale.

All because, financially, things did not line up *exactly* as they needed to.

So I would say no.

[ChunkyNicksChunkyMom]

Well my dream house is currently for sale right down the road! But college/retirement savings is more important to us right now. If I were younger I would totally convince my DH to go for it!

[SnuggleBuggles]

Yep, that's what I thought. :) I can't imagine I would ever do it either. I hate debt and would hate financial stress. We'll just admire it from afar...and befriend the people who move in there next. :)

Beth

[JTsMom]

I'll agree that it depends on how stretched we're talking. We went up a tiny bit above our goal, but still stayed well below what we could "afford" officially. I think what you can afford on a monthly basis, including taxes, insurance, increased utility bills, etc.- the whole nine yards, is more critical than the actual price tag on the house, kwim?

I would never push to the point of having to give up other things for a dream house, but push to the point of say, $100 more a month to go from something I'd hate to something I'd love if it wouldn't really change anything- maybe.

[crl]

I would not stretch. We have always underbought, the first time by half! And I've never once wished we had gotten a more expensive house.

Catherine

[bubbaray]

No. Not a chance. Most people here are stretching to afford a basic home and I am so thankful that we are not. We could well afford a dream home but choose to stay where we are.

[smiles33]

So I'll be the odd girl out and "confess" that we stretched to get our current house (which is likely our forever house unless CA falls into the Pacific Ocean after an earthquake or this neighborhood turns into a war zone!). We were happy in our first house, but starting to crave more space as our first house was in a dense planned neighborhood (think townhouses on postage stamp sized lots). We made a list of minimum requirements and a list of "dream house" wishes. We told our realtor our initial budget and ended up going over it when we found a house that met all our dream house wishes. To be clear, dream house to us were things you can't remodel later like location (near a nature preserve, close to DH's office, very little traffic, neighborhood park 3 blocks away), lots large enough to offer more privacy but not so gigantic that it's hard to maintain, nice open layout, more bedrooms, etc. Eventually, I'd love to remodel the kitchen (rip out the tile and say goodbye to grout forever!), but this house has great bones!

However, stretching our budget didn't make us live paycheck-to-paycheck. This was before we had kids so we were DINKs and just cut back on extras. For instance, it meant I could no longer max out my retirement contributions, though I still put in the max to get my employer matching funds. Basically, we lost a lot of our discretionary income. Instead of eating out at nice restaurants every week, we only went into the City for special occasions.

Five years later, we're back to the level of discretionary income we had before we moved here (even with the expense of full-time daycare for 2 kids!). We presumed our salaries would continue to increase, but I know not everyone can presume that. We were still early in our careers (less than 5 years out of professional school) when we bought this house. Plus, I think we're fortunate because DH owns his own business and I work for a university, so it's highly unlikely either of us would be laid off unexpectedly.

Anyhow, it was a good decision for us, even with the dramatic drop in prices! Even though the new house has lost equity (basically our entire 20% down payment plus more), we figure it all evens out as our first home's value has dropped even further as there are more starter homes competing for the same buyers.

[wellyes]

So, it made me wonder if your dream house (well, realistic-ish dream) house came on the market, would you take it even if it were way at the max of your limit (or even slightly above)?

We've had two houses so far & are just talking about a 3rd now. We always buy based on HIS income only, just to make sure it's never too much of a stretch and we'll always have money for investments, savings, travel, etc. I'd definitely go slightly over *that* budget for a dreamhouse.

But if the budget = what the mortgage people are willing to lend based on our combined income? No way. Money stress kills joy. And marriages. Heck with that.

[bigpassport]

No. Its not worth sacrificing peace of mind, financial comfort and security.

[sste]

Maybe under a pretty unusual circumstance - - as in absolute dream house, could be retrofitted for retirement, and I could bury myself in the backyard too to justify the spending! The only reason I would remotely consider doing this is that I am tenured so my income is extraordinarily stable across my lifetime (and great disability insurance to boot). DH is not tenured but he is in a very in-demand medical specialty where the worst case for unemployment would be having to travel for well-paid private locums work, or at least well-paid relative to his current academic job. And I would want to base the purchase off of my guaranteed salary.

Still, I am just not so into houses . . . I really like getting out of the house, going out, traveling, etc.

[Carrots]

If stretching meant I had to go back to work to help pay for the house, then NOPE.

We bought our house 5 year ago based on DH's salery at the time. We even bought it for less than what we budgeted. I don't have granite countertops or a grand master suite, but we live without financial worry and that means the world to me. I really love being a SAHM and feel lucky I am able to afford it.

[KrisM]

I wouldn't either.

What I'd do is estimate the price, figure out a mortgage payment for that price and sock away the difference between that and what you're paying now. If the house comes on the market in 5 years, then you'll have a nice amount for a down payment and maybe the price will be in your reach without much stretching.

[wellyes]

If stretching meant I had to go back to work to help pay for the house, then NOPE.

We bought our house 5 year ago based on DH's salery at the time. We even bought it for less than what we budgeted. I don't have granite countertops or a grand master suite, but we live without financial worry and that means the world to me. I really love being a SAHM and feel lucky I am able to afford it.

This is a great point. We bought our house pre-kids with every expectation that we'd have a few, but both work full-time. Turns out after maternity leave I didn't want FT and was able to reduce my hours dramatically. That we were able to easily afford that - and that I could SAH if I want to with a little belt tightening - is awesome. Better than any dream house.

[jgenie]

No. We bought our house based solely on DH's salary. I knew I wanted to change careers or stop working and I didn't want our house to take that option away. Would I love a new construction home with a large yard - Yes - am I willing to give up what I have now to get it - No way.

[mom_hanna]

No. We underbought by a lot, and love our neighborhood and neighbors. We don't have granite, or big bedrooms, but it is big enough for us and we don't stress about the mortgage. I am also one to prefer a smaller house to a larger one, and don't really have any thoughts about what I would want in a dream house anyway. But that's just me.

[SnuggleBuggles]

I wouldn't either.

What I'd do is estimate the price, figure out a mortgage payment for that price and sock away the difference between that and what you're paying now. If the house comes on the market in 5 years, then you'll have a nice amount for a down payment and maybe the price will be in your reach without much stretching.

That's a neat idea. I like it. I like saving money. :)

Beth

[newg]

nope, wouldn't do it......I have other dreams besides a "dream house". I really like the house we just bought and I feel like we can make some changes to help turn this into more of a dream house.
My mom built her dream house once...........we moved in in Dec. and found out my dad had to move the following spring because his job was eliminated (he found a new one in a different state)..........so my mom lived in her dream house for less than a year.

[niccig]

I wouldn't either.

What I'd do is estimate the price, figure out a mortgage payment for that price and sock away the difference between that and what you're paying now. If the house comes on the market in 5 years, then you'll have a nice amount for a down payment and maybe the price will be in your reach without much stretching.

And if the house doesn't go on the market, you've got a nice nest egg for college/retirement/investments etc.

[codex57]

Nope, too much crap comes up. Particularly if you have kids.

[lowrioh]

When we were looking at houses my favorite house in town went on the market and we really thought that we were going to stretch our budget and take the plunge...until we actually went in and looked at the house. It was a 1920's Sears home and GORGEOUS but it needed a ton of maintenance and we knew we couldn't afford the house and the upkeep.
We ended up getting a 1960's split level that I LOVE. It just suits the way we live our lives. No sweeping cherry staircase or marble fireplaces but it is very homey.

[rlu]

No, I know someone who did that and now they are planning to just walk away from their house. They can't afford to sell, can't afford to pay as their 10 year fixed arm is about to go up, and the bank won't talk to them to refi until they miss a few payments. And even then, not sure they could refi since they owe more than what the house is now valued at. They are messed up financially and will be for years afterwards. It's horrible, but they overbought and got caught.