Why your first home should NOT be your dream home!

General perceptions about how to buy a home are as abnormal as interest
rates and  many first-time homebuyers have been  encouraged to "buy
big", in order to stretch their budgets as much as possible, and buy the
home they wanted to live in forever.  In the past, first-time buyers
looked for purchase older  houses  to try to save money .Remember that
by considering a fixer-upper for a first home, you can build equity over
time and later move up.

Four economic changes that should discourage buyers from overspending on their house payment:

1. Inflation: while hard on the household budget, usually came
along with annual raises. These days, homebuyers cannot count on a raise
to make their housing payments easier to handle.

 2. Today, most households have two paychecks that are necessary
for the mortgage.You might consider basing your home price on one income
or perhaps 1 1/2  to make sure your house payment will be affordable if
one of you loses a job or stays at home.

 3.  We're headed back to higher interest rates and more down
payment necessities, but lenders will always give borrowers the maximum
amount they qualify for - not necessarily what they should spend.

 4.  Today, retirement savings are more typically individually
funded that come directly from your budget....if they're lucky enough to
have one.


Each of these changes suggests that today's homebuyers should
be shrinking their housing budget instead of expanding it, to be sure
they can comfortably keep up with their payments, pay down their
principal and build equity in their property.