Buy the Expensive BIG house or the cheaper, smaller house?`

amother

Tue, Jan 05 2010, 12:44 pm

We are looking at moving and IYH buying our first house. The community that we are looking at tends to have houses with three bedrooms. A master (which is just a big room, a med. room and a small room, sometimes, tiny). If we buy one of those houses which is mostly what's available, we can easily afford it. However, we just saw another house which is a lot more, however, if they drop it by about 100K (which they probably won't do), we can afford it, maybe.

So, is it better, to buy the biggest house you can afford, even if it would really break the bank now, thinking that eventually, you'll IYH fill it up, but for the time being it will be empty - we have 2 children and the BIG house has 4 bedrooms plus a guest room for $$$$$$$, each bedroom being big enough for at least 2 kids?

Or, get the small house that we can easily afford, but pretty much are already filling it up? A 3 bdr house, means, one for us, one for the kids and one guest room (if they can fit, sometimes the room is just too small).

People say that as your family IYH grows, and more kids go to school and there's more tuition, there will be more expenses to pay, otoh, to get a house that some rooms will be empty and you'll have to really beg, borrow and steal for?

I wish there were houses in this community that were in the middle.

chocolatemilk

Tue, Jan 05 2010, 12:54 pm

I would say get the house u can afford especially if you dont need the bigeer house yet
why borrow money to pay for something you dont need
and when you do need it you can always sell your house and move
in the mean time save the money that you can to pay for the big house when you will iy'h need it

catonmylap

Tue, Jan 05 2010, 12:54 pm

I tend to think you should go for the house you can afford.

There are no guarantees which way the housing market will go. How much of mortgage are you going to have to take out on the house you can afford?

Are you sure that renting isn't a better option for you??

If you had decided to go for the big house a few years ago with those adjustable rate mortgages-you would have been foreclosed on..

hycup

Tue, Jan 05 2010, 1:17 pm

catonmylap wrote:

There's also no guarantee on how many children you'll have.... the only two sure things in life are taxes and death....

greenfire

Tue, Jan 05 2010, 1:29 pm

confused - the small house has 3 br the big house has 4 ... and you want something in between - 3 1/2 br Scratching Head

a lot of people make bedrooms in the basement and/or attic - hence expanding on a smaller house ...

the one you can afford probably makes the most sense - unless you find a foreclosure - fixer up ...

DefyGravity

Tue, Jan 05 2010, 1:33 pm

My neighborhood mainly has houses with 3 bedrooms so most people put on additions when they start to grow out of the house.

alpidarkomama

Tue, Jan 05 2010, 1:44 pm

Definitely, definitely, definitely I would get the smaller house. We're moving right now, and could get a much larger house if we got a 30-year mortgage (instead of a 15) and took out the maximum we're eligible for. We could spend double what we're planning to! Instead we're downsizing slightly from 1650 to 1550 square feet (3 bed/2 bath still), to a community where housing is about 65% of what our current community costs. We've completely decluttered over the last year, and are really swimming in space right now. Should we decide when the kids are older that we need more room, a bedroom is the cheapest room to add on, and is often even possible to carve out of existing space. There are also many ways to maximize the space in a bedroom with lofts, triple bunkbeds, trundle beds, etc. We have kept our mortgage well, well, well within our means. I know a lot of people say it's good to stretch and buy as much house as you can in the beginning, but I don't think that's the wisest idea. Why struggle to make mortgage payments? Bleah! Definitely lowers the quality of life.

amother

Tue, Jan 05 2010, 1:46 pm

OP here -

Green - The difference between the 3 bedroom and the four or rather five because it has an extra guest room is also size. The 4bdr house has rooms that are enormous! Can fit a minimum of 2-3 kids comfortably in each room without bunkbeds.

As for not knowing how many kids you'll have, I know, dc #2 was after a year of IF.

And finally, if you go with the 3 bdr, it means you'll have to do construction down the line. Will we be able to afford it then with tuitions? And I hate construction! It stresses me out just to think of it.

Twizzlers

Tue, Jan 05 2010, 2:03 pm

I would say that the only way you should take the bigger one, is if you can use some of that extra space to generate income until you need it. can you rent out the basement to tenants? open a business in an extra room?

saw50st8

Tue, Jan 05 2010, 2:12 pm

I think a big question to ask yourself is:

How long are you planning to stay?

Short term? Get the small house. Long term? I would go with the larger house.

DH and I had the same coversation before buying our house. We live in Teaneck and most houses have 3 bedrooms. Ours has 4.5 (one room leads to the attic and has 1 finished room and 1 unfinished room). I hate moving so I wanted to move to a place where I had enough space to fill out. Now, with the housing market, our house lost value. BUT! We don't need to move so it doesn't matter. When we moved, we had 0 kids and now we have 2. In the smaller house, we would be bursting. In our house, we are comfortable ands till have room to grow.

Might I suggest looking for a house with size that needs some work? You can do renovations slowly.

nicole81

Tue, Jan 05 2010, 2:15 pm

does the smaller house have a basement?

I live in a small 3 bedroom house and use the basement as the guest suite.

if you don't want to move when you need a bigger house, you could always take a second mortgage or a construction loan if you really need the space.

but I'd be really wary of buying a barely affordable house now because as your kids get older, tuition will go up, as well as food and clothing expenses. plus more kids iy"h. and we're not exactly in a great economy; most people can't say they have job stability.

DefyGravity

Tue, Jan 05 2010, 2:16 pm

I'd only buy the larger house if you can afford it. If you'll barely be able to make ends meet, then it's not worth it.

ilovestrollers

Tue, Jan 05 2010, 2:22 pm

I would get the smaller house now, as it sounds like the larger house will be a struggle. Don't forget that in addition to a higher mortgage payment, you will also have higher utility bills and other upkeep expenses. Later down the road, you can always get a home equity loan or line of credit If you would be able to afford the higher mortgage payments when you have tuition, you can get a home equity loan or line of credit to do construction.

alpidarkomama

Tue, Jan 05 2010, 3:04 pm

We have an Israeli-style guest room. The kids give up their beds! Smile

amother

Tue, Jan 05 2010, 4:52 pm

amother wrote:

OP sorry to be the lone dissenterhere so far, but let me ask you something.

when you say break the bank, do you mean you will be not making ends meet for yrs to come ? how much more/month in mortgage payments are you talking? 300 dollars? or3000?

We went through the same dilemma recently too. Here is the story, sorry I am writing it in all its gory detail, but hopefully what I am writing will help, since we went thru what seems like exacty the same dilemma just a couple years ago.

our neighbohood sounds like yours. you either have the 3 bedrooms, or you have massive houses. not much in between.

so the one we fell in love with (block, neighbors, pretty brick house, garden, swingset, just enough space, etc), was a 3 bedroom like what youdescribe (master= just a room that was a bit larger than the med. and tiny two), 2 bathroom house. We made an offer on it. hindsight is 20/20, and b'chasdei hashem, the deal fell thru at the last minute, 3 days before the closing. it was so upsetting, but looking back it would have been a tremendous mistake, because as much as we thought it was nice, it did require ALOT of work- minor stuff here and there, but it adds up quickly (to the tune of 50,000 + according to our pre-work estimations!). between windows all being old (30-40 years old), peeling paint, a new banister to replace the old shaky one that had a "wheel chair escalator" attached, carpets that desperately needed replacements thanks to cat pish EVERYWHERE, treif appliacnes that needed tobe sold and replaced, new countertops because old ones were treif, itwasnt such a bargain. and that is not cosmetic stuff because we want a gorgoeus new luxury house. it was just basics that are real necessities in a new house! kashrus and safety.

So we stayed stuffed in our apt a little while longer, and 4 months later, an agent called us about a slightly larger house in the same area (5 bedrooms instead of 3, with a full basement with two additional "rooms"!), a "real" master (ie- bathroom w jacuzzi tub in the master, plus tons of closet space), and a kosher kitchen. in other wors- yes it was bigger,yes it cost more (240,000 more!), but it was move in. we did nothing to the house itself other than buy shades and replace the front door. they took their microwave and left the other applicanes. it even came with an alarm systm from ADT and cable/internet etc was there, we just had to call and ask them to connect us, no wiring. our down payment was more than it would have been on the original house, but in the end we really have very little to do to hte house- it is newly built so hopefully (BLI AYIN HARAH), there wont be as many unforseen problems-creaky floors, old water heater leaking pipe-the problems you sometimes encounter in a house that has been lived in by s/o for 50 yrs (like the first one), we didnt have to put in 50K of money toward changing it, we wont have to do renovations and build up or out 10 years from now IYH as our fam grows, and we know this is the community where we want to build our fam, so hopefully we have enough space to never need to move!!!

our mortgage payments are 530 more a month than they would have been on the first house. can we afford it? yes. is it tougher? definitely.but I think it was worth it in the end, we are not dipping into savings, but we are not saving as much per month (obvoiusly! 500 less) than we would have been had we gone with the other option.

chocolatemilk

Tue, Jan 05 2010, 5:03 pm

amother wrote:

what you are saying is that even though it was tight with the bigger house you could afford it
as you were only cutting down on how much you were saving
op can you afford the bigger house in that u'll b cutting down on savings?
then go for it
but if you are putting all your money in and borrowing (as I think u said)
then it doesnt seem worth it.

americans got into this bad economy by buying what they can not afford.
if you cant afford it dont buy it!

amother

Tue, Jan 05 2010, 6:28 pm

I would definately go with the smaller house!

We did exactly that - small 3 bedroom house (about 1,500 sq. ft. which includes a small addition); bedrooms are not large (you only know it's the master because it has 2 closets!) no master bath, etc.

But - very affordable mortgage. Highriser in finished basement makes a great guest room. We rent out part of the basement for further income (reduction of mortgage).

We added a swingset. We recently completed a very modest kitchen renovation 4 years after we moved in (the kitchen was in horrible condition). We used a bit of money from savings but the rest we took out a HELOC for. As our mortgage was so low we were able to put significant additional funds to principal; in the 4 years of owning the home we had already $15,000 in equity to tap.

I don't regret doing it this way for a second; not to have financial pressure is so liberating!

mommy7

Tue, Jan 05 2010, 6:37 pm

Unless you get a 3br house for a steal, buying one and then doing construction later to add on is going to cost you more. If you're thinking that you'll end up needing a bigger house in the end, then get it in the beginning, especially in this market. I have a small house, added on, and we're in for much more than if we would have just bought a big one to begin with. BUT the big houses available near me are fairly new construction. The ones in a different neighborhood are very big, but also very old, and would also need a lot of money put in for things like updating the HVAC, old pipes/sewer issues, reshingling etc.

If the big house is in great shape and u won't have to put any $ into it aside from say, a paint job, consider it.

I agree, though, rent out a room/basement to a gemach or tenant or playgroup if you can. it really helps with mortgage payments.

sky

Tue, Jan 05 2010, 6:45 pm

I would say go with what you can afford. Do you see yourself soon making additional money to afford the bigger house?

Also, don't buy a bigger house just for the guest room unless you have guests every week. You can always move a kid out of their room for the night.

don't forget a bigger house will probably also have higher taxes, be more expensive to heat and cool, and insurance will be higher (and clean if you need cleaning help). You have to add that all into your additional expense.

(And about the kitchen in the previous post - you can kasher a lot. We were able to kasher our counters, sink (but we hav only one), stove and microwave. We did not kasher the dishwasher. )

nicole81

Tue, Jan 05 2010, 6:54 pm

amother wrote:

well I had sort of the opposite situation which is why I'd be wary of buying a more expensive house in this market.

we were in contract for a condo last year but it the deal fell through after a couple of months. instead, we decided to look for a house and purchased one this past summer. the mortgage was a little high for us, but not that bad. we could still manage to pay all our bills and save a decent amount so we went for it, knowing that I was in for a big pay raise within a year. but 4 months after we bought the house, because of the economy, dh suffered a huge pay cut. we can b"h pay our monthly bills but just barely, which is a scary situation. you need to be able to save when you own a home... right now my roof has a leak and god knows how much fixing that will cost.

you never know what will happen and I think putting yourself into a situation where you will barely be able to make ends meet is foolish. because anyone who lives like that knows it stinks, especially when you can't just leave your house and find a cheaper apartment to rent.

but this is all moot OP because you mentioned offering 100K less than asking price. so why speculate and agonize over this decision when you don't even have a decision to make yet?