You’re ready to start your home search, and you have a lot of questions. One of the things to tackle first is deciding just how much home you really need. The answer to this question has a lot to do with how much house you can afford, but it shouldn’t be based solely on your salary.
According to Sam Dogen, founder of the independent personal finance site Financial Samurai, the ideal house size is one "in which you feel comfortable while also having a high utilization of space. If you buy a house too big, you'll have excess maintenance headaches, higher maintenance bills, more cleaning to do, higher heating bills, and likely higher property taxes. Owning a house too big is like driving a diesel bus when there's only four of you — a big waste of money."
When making a decision about how much house you really need, house hunters with more modest incomes are far more likely to follow expert advice than someone who just came into $180 million.
Dogen and other home finance experts share these tips that will help you determine how much house you need based on your lifestyle, not just your bottom line:
Are you searching for your forever home?
If you wouldn't absolutely cave under the pressure of moving your family into a new home, you should select your starter home with the idea that it won't be your last. That way, you can choose just as much space as you need for now.
"There's a common perception that you should be searching for your 'forever home,' and that pressure to find a place that has all the space you might ever need often leads buyers to purchase a home that might be too big," Jackie Hinton, a real estate agent with Center Coast Realty in Chicago told Realtor.com. "It's OK to know that you'll only live in a home for the next five or six years, and to buy a home that will serve your needs during that period. You can always re-evaluate and upgrade to a bigger space later."
How much space will each resident need?
Think about this in terms of square feet, recommended Dogen. "Will you feel comfortable having 400 square feet, 500 square feet, or 800 square feet of space to yourself? I'm personally comfortable with about 600-700 square feet of space per person, or 1,800-2,100 square feet for our family of three. Adding a 200 square foot family room to my house's existing 1,920 square feet would be perfect."
How much financial wiggle room do we need?
"Nothing causes more stress than financial strain," said Bill Rice, president of MyPerfect Mortgage.com. "A mortgage on a home that is a size too large is most likely to be your biggest burden, and a hard one to overcome. Happiness is often one size smaller than your dream home. That way, you can enjoy your home without dreading your monthly mortgage payment."
Also factor in that each square foot of additional space will mean more upkeep and maintenance, not to mention higher heating and cooling bills.
Do you really need space for entertaining and visitors?
Be honest, Realtor.com advised. "While you might dream of hosting epic dinner parties in that big formal dining room, will you really? Can you say with certainty that your in-laws will descend on you during the holidays and need a guest bedroom to crash in, or might they be just as comfortable in a nearby Airbnb?"
Especially if you're a millennial, the generation that is leading the casual dining trend, you may not even need much space to cook or have friends over.
At what point is space gained creating opportunity lost?
Make sure you're not adding square footage you don't need at the cost of other dreams, like travel or further education. Cutting back on size can also help you get into a better market where you can enjoy the space more. "Being open to a smaller home allowed us to be in a higher-priced market we wouldn't have been easily able to afford otherwise," real estate investor Kathy Fettke, cofounder and co-CEO of Realwealth Network told Realtor.com.
Is this home the wrong size to resell?
In the excitement of buying a starter home, don't forget you may have to sell. That can influence how big of a home you want to purchase, too, Rice said. He recommended asking, "'What is the most typical size home in the community I intend to live in?' Homes larger (or smaller) than this median size home are going to be the hardest to sell and most volatile in price. Staying in the middle is your best value."
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