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Establishing Your Home Budget is a Delicate Balance.

Recently, we talked about an important home buyers tip: carefully planning for your future so that you find the perfect home to fit your needs.

Let’s revisit the subject by taking a look at why people chose to move, and what the potential downside is to moving to early.

The three most common reasons to move are: “moving up”, family, and work.

According to the Current Population Survey, the number one reason for a move is housing: moving to a better home in a better neighborhood.  The second most popular was family related, which accounts for about one quarter of moves.  Under 1/5 of moves were work related.

Knowing the biggest motivations for moving can help you predict your motives as well.  Think carefully about these three factors and how they will change in the future so that you can avoid an unnecessary move.

Balance an affordable mortgage payment and leave room to grow.

When we were getting ready to buy our first home, we were faced with this issue.  An important goal, in fact, one of our main priorities, was to make sure that we carefully budgeted for our mortgage payment.  We did not want our finances to be uncomfortably tight, and we wanted to make sure that we could afford our bills and still have money to cover unexpected expenses and maybe even a little recreation.

When we first created our budget, we started our home search based on the very smallest mortgage payment possible that we thought could buy a home we would be happy with.

The homes in this price range were, frankly, too small for us.  We would have probably become uncomfortable and had the desire to move again within a year.  When you are renting, it is okay to have this mentality, but not when you are looking to buy a home.

There is a possibility that within the next three to five years my husband will get a raise, or I will go back to work.   We are planning on having another baby, and maybe a dog.   If our budget increases and our family grows, but our home is in the minimum budget we can afford, in the minimum neighborhood we can afford, we are likely to want to move up.

We changed our budget slightly to avoid “outgrowing” our home too quickly.

So, we decided to increase our budget for our home, slightly.  This allowed us to buy a home that has room for us to grow.  It also moved us into a better neighborhood, with a better school.  Our budget is slightly tighter right now, but, we are in a home that we will be happy in for the future, and I can even see us living here permanently.

It is a delicate balance between the smallest monthly payment which buys house that you might quickly outgrow, and too large of a monthly payment and a home that has more than you need.