The bloggers over at Marvin’s blog, MLuxe, wrote about a common issue with first time home buyers; do you buy the home of your dreams or “just” a starter house?
A saying heard often in the real estate industry is “House Poor”:
A situation that describes a person who spends a large proportion of his or her total income on homeownership, including mortgage payments, property taxes, maintenance and utilities. House poor individuals are short of cash for discretionary items and tend to have trouble meeting other financial obligations like vehicle payments. – Investopedia
Clearly, if you shoot for the stars in the purchase of your first home and your mortgage is too high, then you’re going to find yourself House Poor. However, as the MLuxe blogger points out, many people see their first home as the home they want to build their future in so it’s worth it to them to get it right the first time around.
It’s hard to tell when the economic downturn will shift upwards again, so it’s important to consider your first home purchase carefully. Good communities and a good foundation are important and could make for a long-lasting good decision, whether it is your dream home or “just” your starter home.