Jan 10 2023

Buying a house: Right size vs. right budget

buy a home

Before you buy a home: Learn how to balance the amount of space you need with your budget.

Are you preparing to buy a home? After speaking to a Loan Officer, you might have pre-qualified* for a specific loan amount. Maybe this amount is more than you expected. Now, it’s up to you to decide what makes the most sense for your purchase.

Do you buy a home based on the size you need or on your new housing budget?

Balancing your ideal house size with your budget

Here are several factors that can help you decide what type of home to purchase:

Less house versus more house.

There are times when getting a bigger house might be the driving factor. You may have gotten married and are preparing to start a family. Or perhaps, you’re planning to live with multiple generations in one house.

Having space to accommodate family members is essential. You may also appreciate having extra room for entertaining, hosting guests, or working from home, making the additional space an important feature. It can be easier to buy a home that’s larger than you need right now compared to adding space later. Making additions to a house can be costly.

A bigger home may also have a higher resale value, depending on market fluctuations. The demand for larger single-family homes continues to rise, according to the National Association of Home Builders.

But with the pros, come the cons:

  • Keep in mind that a bigger home won’t just cost more at closing. It may carry extra expenses that add up over time.
  • For example, the price to update carpeting and flooring will rise with square footage. Bigger houses also tend to have more windows, which will cost more to replace if that day comes. Likewise, if your roof springs a leak, a larger roof may cost more to repair or replace.

Heating and other utilities increase as the square footage goes up too. A smaller home may allow you to conserve the most energy because there’s less to heat and cool.

If you’re ready to start your journey to homeownership, we’re ready to help.

Contact your local Academy Loan Officer for guidance.

Staying at a lower budget or maxing your loan amount.

Using the maximum loan amount you’ve pre-qualified* for has the potential to decrease your disposable income. Essentially, if you max out your housing budget, you may not have as much money to spare.

If you buy a home just under the maximum loan amount, would you be a month away from financial disaster? Deciding now what your priorities are in terms of cash flow and house size will help you feel confident in the choice you make.

While your Academy Loan Officer is here to assess your unique needs and help you make a comfortable financial decision:

  • A mortgage lender doesn’t know how you spend and save your money month-to-month.
  • Other costs can add to your monthly mortgage payment too. These might include property taxes, mortgage insurance, home maintenance and repairs, and even an HOA.
  • Ultimately, you’re in the driver’s seat, and you get to decide what a manageable monthly mortgage payment—within the amount you’ve pre-qualified* for—will be.

In most cases, it’s not a good idea to max out the loan amount you pre-qualified* for if it restricts your cash flow to unrealistic levels. The amount you spend when you buy a home will depend on your individual goals and preferences.

Sometimes, spending less on a house means getting to go on more vacations each year or having more money to invest and save. Alternately, buying a smaller house may mean more headaches as your family grows, your kids get bigger, or in-laws move in as they age.

To find your answer, it can help to track your monthly expenses. You can do this the “old-fashioned way” using a spreadsheet or with a budgeting app. Once you know exactly what you’re spending each month—on credit cards, groceries, car payments, and more—you can see where a comfortable monthly mortgage payment fits in. This can help you determine if you should skew lower or higher based on your pre-qualified* amount.

We bring the finish line to you

Buying a house can feel like a marathon—between applying for a mortgage, hunting for a home, making an offer, and crossing your fingers that everything goes through. But at Academy Mortgage, we bring the finish line to you. Are you ready to take the first step? Contact your local Academy Loan Officer.

*Pre-qualification is not a commitment to lend. The information shared is for general informational purposes only. The information provided does not constitute a suggestion or advice. Academy Mortgage makes no representation or warranty, express or implied. MAC124-1484810.