Dream house vs. really tight budget- WWYD? - Mothering Forums
Frugality & Finances > Dream house vs. really tight budget- WWYD?
Faith's Avatar Faith 08:17 PM 09-10-2004
Would you buy your dream home if it meant being rather tight financially?

We moved here from 2000 miles away a year ago. In our old town, we owned the perfect little place, and now we live in a rental on the main drag thru town with no yard, etc. I have had some pretty bad mommy-guilt. Even though this is *definitely* a much better area to raise our family in, I did take away a great yard from my DC and now they have to be driven to the park in order to simply 'go outside.' My car has been having issues, so they are days we just have to sit here, yk? It is totally my dream for DC to have a huge yard to run wild on.

Our old house just sold, and it enabled us to become debt-free completely. It was something we were working really hard on anyway, and it finally happened. But, in the meantime, the year of living here while owning our old house did a number on our credit.

Now, we have a really good chance of being able to buy this one house. It is thru a friend who would really work with us to help us get a mortgage we would normally not be able to get, and the house is at a great price. But it is a one-time shot. It has to be this one house.

The house is perfect- over 2000 sq. feet, almost new, on seven acres on a dead end road, creek, woods... just wonderful. If we pass it up, it could be years before we are able to think about buying something like it.

But it would really stretch our budget! We would be able to pay our bills each month, and have a bit left over incase we needed to make a car payment someday, and that is it. There would not be a lot of wiggle-room at all!
In one way, this is okay. We are used to budgeting. DH enjoys doing side-work and could bring in extra money if he needed to.

But is it wrong to set ourselves up to be so tight financially?

Of course, the other option is that we stay here for a bit in the rental, repair our credit over 6-12 months and then buy a lesser house- but then it will be a temporary house because what we can afford is generally not that great and in need of work, not on beautiful acerage, etc.

I *REALLY* want this house, but I also hate being poor every month.

What do you think?

~ who is nine months pregnant and has been having light contractions for two long days...

mommyoftwo's Avatar mommyoftwo 09:14 PM 09-10-2004
Hard to say because I don't complete know where you are at financially. Do you have some savings-a cushion?

I say go for it. I didn't think that we could afford our last two houses and we have been fine and it is a great investment. We still get by even after I started having babies and quit my job.

I have heard that your mortgage/ rent should be more more than 1/3 of your take home income.
mclisa's Avatar mclisa 09:56 PM 09-10-2004
If it was just a house that would be one thing, but it has all of the land around it that just sounds so perfect. How tight is tight? Are you going to be resentful each month when there is no extra? No vacations? How long will it be tight? For as long as the mortgage? That can be a long, long time to always be that tight. It just sounds hard to maintain.

Sorry to point out the negatives, but we are ever so jealous of potentially getting an acerage. We keep looking for one, but they are just so hard to come by.

Good luck getting it done before junior comes.
bluegrassmom's Avatar bluegrassmom 09:59 PM 09-10-2004
To me, it would depend on how much you already have in savings and what your college/retirement funds look like. Does that stretched budget already include money going straight to savings or retirement? If you don't have savings or aren't putting into 401ks or something similar, I would wait on the dream house. You want a house to be a blessing, not a burden or a curse! Think about what might happen if something went wrong and it needed a major repair not covered by insurance. Would you be able to cover that without it being a catastrophe? Financial stability is important for you and your kids, especially when it's in your power to create it. Having a dream home is great, it really is...but in reality a home is what you make it, regardless of its size or beauty.
polka hop's Avatar polka hop 10:12 PM 09-10-2004
goodcents's Avatar goodcents 11:10 PM 09-10-2004

All things considered the real estate market is set to come down. If you buy now you could really be kicking yourself in the pants in 8-12 months.

The average price of a new home dropped 5.6% in June and also in July. It had been predicted it would also drop, or at best, not gain, in August because traditionally the real estate market is veyr slow in August. This coupled with the fact that mortgage companies are still dropping their rates, in an opposite direction of the Fed, indicates they are begging for clients. Houses are not selling like they used, and please don't get caughts up in some real estate agent fast talk that they are.

I recommed getting the book The Coming Crash of the Housing Market. There are a number of reasons this guy presents for a housing bubble, and even if there isnt a bubble - he will inform you why it is not a safe and financially responsible thing for you to overextend your family in this way.

If you are meant to be in that house, you will be. And if you don't end up there - WHO KNOWS you could end up some place even better!

My DH and I came very close to buying two house in May and then June. We have decided to wait until after April when second baby comes. We can save more money, and really wait for more things to come onto market.
Oh the Irony's Avatar Oh the Irony 11:23 PM 09-10-2004
What is the condition of the the dream house? Is the roof more than 10 years old? heating and air? is it well insulated? does it need painting? WHY is someone willing to give you such a good deal? If it is going to need work that you have to hire people to do, I say skip it. It's only a good deal if you can afford it. (I'm a Pisces who is trying to take my rose colored glasses off and deal with reality better!) Also, would you have to get furniture to fill the space?

I've been house poor before. If you have to work so hard to pay for the house, repairs, etc. then you lose the quality of life you are trying to gain.

I also don't like the sound of the friend who will arrange a mortgage that you normally could not get, but just for this one property...

I don't know why I am so down on this tonight. The woods and stream sound lovely--I do totally hear you about the yard issue.
littlecurvieme's Avatar littlecurvieme 11:37 PM 09-10-2004
That is a really hard one.

I am leaning towards going for it, but I would definitely be checking some things out first.

I think most importantly is that you need to make sure that the house is in good shape, and be sure that there is *somewhere* you could get some money to do an emergency repair.

If you have all of that land, could you rent a small portion of it to a farmer or something in order to make some extra money? Or a gardener? Something?

If this house has more room, is there a way that you could have a work at home business in order to supplement income and be able to write off expenses?

I don't know. I know myself, who is definitely NOT the Queen of Money Responsibility, and I would get it. It sounds amazing!!!
mamalisa's Avatar mamalisa 03:02 AM 09-11-2004
You've got some great advice. The only thing I can add is that you need to have savings. House repairs are so damn expensive and rarely can you postpone them. If your furnace goes, well, you have to fix it or live without heat. Dh and I scraped and scraped for our house and it was really tough. I hated to sell it, but it's nice not to have to worry about which bill might not get paid this month.
TiredX2's Avatar TiredX2 03:19 AM 09-11-2004
In your OP you said:

We would be able to pay our bills each month, and have a bit left over incase we needed to make a car payment someday, and that is it.
Does this mean you would have $200 after savings, bills, mortgage, etc... each month? Will you be needing a new car soon? To me, being able to save $2400 yearly for unexpected expenses (on top of bills, savings...) would feel like plenty of $.

We definately can't afford the house we are in and it pretty much sucks a lot of the time. Stressful. At the same time, though, it has gone up in value about $50K so if we hadn't purchased three years ago, we certainly wouldn't be now, kwim?

From what you say, this particular house would be worth a lot to you (save on gas money, happier around the house...) so I would probably go for it. We have a 5K lot and can't handle that much, so it definately wouldn't call to me :LOL

Good luck!
Faith's Avatar Faith 04:34 AM 09-11-2004
Thank you so much for the great replies! You all gave me a lot to think about (and I want to think about this and not the baby not coming! ).

To answer some questions...

Yes, we would have about $200/month left over. I guess that is a good amount. I am just so used to being poor I am being very cautious!
But no, we don't have any savings besides my DH's 401K. I know we should, but the move here was extremely financially hard on us. We are expecting a big tax return this year though, and that will go into savings.

The reason we are getting such a great deal is because the house has a lot of emotional attachment to the owners (our friends) and they want to see it go to someone who would love it like they do. They also are very well-off and very giving people, well-known and liked in the community, and share our faith. So that is why we can do this. We are also getting it well below it's appraisal.

The house is really new, so it shouldn't have anything go wrong. Of course, anything is possible, but it's not likely. Plus, there are things about is that would help us save money, like a wood-burning stove for in the winter, etc.

We couldn't really rent any of it. It's mostly thick trees... but I bet we get asked a lot if it people can hunt it. (Scary-- to me anyway!)

And, yes, this would be our *forever* house. That is one thing that makes it so great- it would be really hard to outgrow this one- and I am tired of moving every so often, getting a house fixed up, and then eventually starting all over in a different house.

So, I think we are doing it! I am SOOO excited. We are mentally putting our furniture places, thinking of DS sleeping outside in his tent on the deck off his bedroom, and of him and DD just being able to go outside instead of watching a video when I need a break... No more sirens blowing by our house all hours of the day and cussing, screaming neighbors, etc... I can't wait.

Hey, if any of you live close by (WA) you are welcome to come play in my yard!
TiredX2's Avatar TiredX2 05:11 PM 09-11-2004

Hey, if any of you live close by (WA) you are welcome to come play in my yard!
Where in WA? Better be careful, I'll be there with my tent, lol.
Faith's Avatar Faith 05:40 PM 09-11-2004
The great Lewis County!

It could be worse... at least the house is nice, right?
comet's Avatar comet 06:24 PM 09-11-2004
What did I do? I bought my dream house. I regret it. Save your money, get a less expensive place. For all the reasons goodcents talks about. Live well beneath your means and you can't go wrong.
boysrus's Avatar boysrus 07:41 PM 09-11-2004
Iwould have to say dont do it also. Tight is really scary when buying a house. Wait 10-12 months, get your finacnes in order, and then do it.
My best friend found her dream house, they were totally stretched to do it, and she was miserable!! Luckily she rented with option and so was able to get out of it
momto l&a's Avatar momto l&a 08:33 PM 09-11-2004
We just bought our dream place. It made the $ tight but you know it is soo worth it.

We have wonderful credit so that wasnt a problem for us.

We didnt realize how depressed we where living in a place we didnt like/love.

We have found money to come when we need it and we have found people to be very generous in helping us live in the country.

This place we got was a steal and we jumped really fast to get it as there was another offer that had just come in for it.

If this is a place you and your family really love and want, go for it.
Red's Avatar Red 09:27 PM 09-11-2004
I wouldn't!

I'd look for something else that I liked and could afford more easily. Financial stress is so awful!
sadean's Avatar sadean 11:17 PM 09-11-2004
I guess the questions you could ask are: How long will it be a tight stretch? We bought our home 7 years ago and yes, it was tight, but as our household income has slowly gone up, it become less and less tight. Now it is comfortable, but it took at least 5 years. Would you be comfortable for that long? Do you see increasing income(s) in you future?

We were recently considering buying a new home, as we have 2 (soon to be 3) kids, and almost no yard. Had we found our perfect hme, we probably would have jumped on it, even if we felt stretched again (not too stretched though).. We didn't, and I have begun feeling nervous about my job. SO, we opted to refinance and have committed to staying here for 3 more years and fixing the place up so that we can get the maximum amount out of it. We are definately living "below our means" and I am feeling o.k. with that...if my job evaporates we will be living "at our means" and can survive...

It is a hard choice to make. I guess I would suggest following your gut.
annethcz's Avatar annethcz 12:27 AM 09-12-2004
Yes, some 'experts' say that there is a housing bubble. Other experts don't think that there is. Depends on who you choose to listen to.

If it was me, I'd go for it. From what you said, you have enough money for bills and still have some $$ left over. Not a ton of money, but it'd be doable. That's kinda where we're at right now (except we don't have the dream house). Sure, it can be tough to live without extras. But I strive to live simply, anyway.

If the housing market continues to appreciate (which it may or may not do, depending on which experts you're listening to), you may not be able to afford your dream house if you wait a few years. I'm so thankful that we bought our first house when we did. There's no way we could afford to buy our current home at this time.

Good luck with the house... it sounds divine
Emilie's Avatar Emilie 02:40 AM 09-12-2004
Good luck whatever you choose to do!!!
We can not wait to be home owners!!! The day will come for us...
I am excited for you!
Also think of what you are willing to do for extra cash as to be able to afford it.
boysrus's Avatar boysrus 01:13 PM 09-12-2004
Also, it doesnt seem that lewis county ousing values are rising so quickly, meaing you wont be priced out of the market as quickly as say Thurston or King Counties.
Are you 1000% sure that Lewis County is where you want to live? NOt being rude(really I am not), but as a crunchy mom, we looked at lewis and also mason counties, and we ran screaming from them. We decided that we moved here bc we wanted to be sorrounded by opportunity and crunchy people, and w decided that to do that, we needed to stay in Thruston County. My DH actually said "We didnt move across the country t move to Centralia. We could have gotten something like Centralia anywhere in the US. We moved her for Olympia." and the Lord provided mightily
If you feel that way about it, then dont do it. With your budget tight, you might end up being stuck there, cant travel to "cooler" places, etc. If you are fine with the area, then go for it, and save up the 200 a month for several months and buy a cheap car with cash. We bought a 1988 Toyota Van with very little wrong with it last year for $500.
lmonter's Avatar lmonter 05:51 PM 09-12-2004
I've got family and friends that live over there! Winlock, Centralia and Napavine. I loved visiting them over there - in the wooded boonies.

I just have two things to add:

Is the house susceptible to flooding? I know that's a problem over there, and my grandma would go on an on about the folks who'd (stupidly) build on floodplains and then bitch and moan when they'd get flooded out every 10-20 years or so. Sometimes more often on the lower elevations where there used to be strawberry fields, etc.

Second, there used to be a ton of more natural type farms out there. Grandma lived between Winlock and Napavine. Had a garden that was about 1/2 acre, bought (whole) milk from a local dairy before it closed, bought fresh eggs from a chicken farm before they closed (both were in Evaline), etc. She and Grandpa would grow and freeze/can sooo much that they'd have to give away at least 1/3 of their food stash every year because they wouldn't eat it or they would run out of space in their (10x10foot) fruit room or 3 freezers and 2 fridges. Before they had an empty nest they also had a chicken coop, cattle herd, saw mill and some other stuff (but that was before my time). So there's plenty of stuff you can do over there.

Boobs's Avatar Boobs 06:13 PM 09-12-2004
I, personally, would not do it. $200 isn't enough of a cushion every month. What happens if you have a car repair or house repair or anything like that come up? If you need new tires on your car or dh gets hurt or sick and has to take a week or two off work or even worse lost his job.....etc, etc, etc. Things happen. I wouldn't be comfortable living in my dream house if it meant being that financially insecure. There will always be another dream house. And the housing market is so finicky. You never know what might come up.

My dream house is sitting less than a block from me and the man living in it has one foot in the grave. I work for him and dream about living in the house all the time. The fact of the matter is though, if we bought that house, we'd be broke. No vacations ever (not that we have ever gotten to take one), no new car ever, no extras anywhere. That's no way to live. I'd rather wait and buy a house that costs a little less and make it our dream house over time.

No matter what you do, I wish you all the best! What's meant to be will be.