We bought our first house almost 5 years ago. It has honestly been one of the best decisions we’ve ever made even though it was really scary to make such a huge purchase.
One of the biggest reasons I consider it to be one of our best decisions is because we didn’t spend too much.
If you’ve seen our actual monthly budget, you know that our mortgage is really low. While we do live in a fairly low cost of living area, we could have easily spent double or triple what we did on our house.
We made a very conscious decision not to spend anywhere near the outside of our comfort zone on our house.
Update: Since this post was originally written, we’ve moved to a more expensive city. You can see what our current budget looks like here, including a much higher mortgage payment.
The #1 Mistake You Don’t Want To Make When Buying A House: Spending Too Much
Spending Too Much On A House Is A Problem That Could Last 30 Years!
Unless you’re paying cash for your house (totally a goal of mine!), you will most likely be stuck with your house payment for 15-30 years.
It’s not like if you go on a shopping spree and charge too much on your credit card. That kind of overspending can probably me remedied within a few months. Overspending when you’re buying a house means that you will be strapped for cash for decades.
I don’t recommend buying a house at all until you’re in a good financial situation.
Big expenses can pop up when you own a house and you want to be ready to handle them financially or else the excitement of owning your own home can turn into a disaster. The book The Total Money Makeover is a good starting point to make sure you’re ready.
Don’t Assume That Your Income Will Ever Only Go Up
You may think that it’s OK to spend a lot on a house because you’ll get raises every year. So it might be tight right now, but in a few years you’ll have a larger income and it won’t be a big deal.
Well, that would certainly be nice, but no rational financial planner would ever tell you to plan on everything always going right.
In the 5 years that we’ve lived in this house, there have been times that we’ve made quite a bit of money and we could have easily afforded a much larger mortgage payment. There have also been times when our income was much lower and we were so thankful that we had such an affordable payment that allowed us to not stress much about money.
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Don’t Let Anyone Tell You What You Should Spend
I’m honestly not even sure how much the bank could have approved us for when we got our first mortgage.
When we went to talk to the loan officer, we told them the range that we wanted our mortgage payment to be in. They told us that to have a payment in that range, we could spend XX,XXX dollars, and that’s what we were approved for.
I’m sure that they would have approved us for quite a bit more, but we weren’t interested. We told them what we were comfortable with and didn’t let anyone convince us that we should spend outside of our comfort zone.
Know Your Monthly Budget
Before you get approved for a mortgage, decide what you are comfortable paying each month. Make sure you would still be able to pay that amount if your income were to drop a bit as well. Then if your income goes up, you’ll have extra money each month to make home improvements and save.
To know what you’re comfortable paying each month on a mortgage, it’s important to have be a on a monthly budget and know where your money is going. How else will you know how much you can put toward a mortgage payment?
If you’ve never budgeted before and don’t know where to start, I have a simple guide on the fastest way to create your first budget.
I don’t ever regret spending what we did on our house. Spending more would have made some difficult times in the last 5 years even more stressful.
When buying a house, it’s so important to understand exactly how much your payment will be, including taxes and insurance, so that you do not spend too much.
Spending too much on a house could mean that you are in a tight financial spot for decades!
One of my biggest motivations for budgeting is so that we don’t have to stress about money. While it’s probably impossible to never stress about money, buying a house with a reasonable mortgage has helped out a lot.
It can be fun to dream about your new house and get caught up in the emotional side of things, but make sure your brain is thinking things through as well to make sure that you don’t overspend and get yourself into a tight spot financially. You’ll be forever happy about that decision.
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