Monday, 11 March 2013

Housing Needs and Wants

One of the basic financial rules when buying a house is not to buy more house than you need.  The larger the house the greater the drain on the planet’s resources, and financially a house larger than you need is going to cost you big time.  You’ll need a larger down payment, have larger monthly mortgage payments, pay more property taxes, have a larger utility bill, pay more for your insurance, and inevitably you will pay more to maintain the house.  All of these are very sound reasons as to why you should buy only the amount of house that you need.  That said I have a bit of a confession, I bought much more house than I currently need.  (There’s a good reason why, promise.) 
When I started my house hunt I had three non-negotiable criteria, two were logical and one was emotional.  First, the neighborhood had to be safe.  Second, it could not surpass my budget of $200,000.  (Incidentally the bank was willing to lend me more.)  Third, I was not living in a box in the sky, aka a high rise condo.  (I know it’s picky but after four years living in a box in the sky I really wanted a yard again.) 
My selection was somewhat limited due to my criteria and I ended up buying a three bedroom 900 sq feet (plus finished basement) bungalow.  Two of the bedrooms are unused and two of the rooms (a sitting room and a half of my family room).  The easy excuse is that there was nothing smaller on the market, the problem is there was.  I also saw a one bedroom house (with no extra rooms) that was about $20,000 dollars less than the home I purchased.  The reason I went for the lager house is quite simple, I want this house to last me at least 10 years.  The smaller house had room only for me and perhaps a significant other.  There was no room for children, foster or otherwise, and I fully expect children to enter my life within the next 5 years.  For an extra $20,000 I bought a house that I could slowly grow into as opposed to a house that I would quickly out grow. 
That said, I did not buy a house that cost more then I can afford.  My fixed housing costs are only 40% of my income, which is reasonable considering I have no other debt.  When looking for a house you’re going to want to make sure that it is one that you will love for a long time, just make sure you can afford it in the long term as well. 

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