For families looking to purchase a home, a mortgage payment, and price of the home can go hand-in-hand decision making. If you find a house that could be a good fit for you and your family, but it seems a bit out of reach. Here are some things you might want to take some consideration to…

Let’s say the maximum purchase priced house you can qualify for is $750kHowever, you would feel a little bit more comfortable with a house around $675k because the payment is more budget friendly with your ability in alignment with your other monthly expenses. That being said, let’s also assume for example’s sake the house for $750ks in a great neighborhood, might need a little bit of work because it’s dated, (work could be done over time? versus the house at $675k that’s a bit more turnkey in the neighborhood that’s not quite as appealing.

What to do? Here’s some things to consider about the $750k home. If it’s in a great neighborhood, it will always carry more value and more appeal driving the equity in the property. This means you could probably attain more home equity and ultimately a property like this could make you wealthier over the course of time even though it might be slightly stretching the budget a little bit, initially. The 750k home will allow you write off more because it’s more expensive home i.e. more real estate, taxes, and more interest. A house like this could be the home could be in for many years to come, and it could be a launchpad for trading up into something else in the future. If the house needs a little bit of work that can be done over the course of time you will probably get a dollar for dollar in sweat equity. This is something to give some big consideration too since real estate is a location play.
On the other hand, you want to make sure you’re doing something that’s going to be budget suitable. If you feel that the $750k home is just too much of a stretch even though you could do it, it’s just not a fit and it’s giving you any concerns or any stress whatsoever, then consider the smaller priced home. The smaller price home could be a launchpad into driving into an upgraded home in the future as your equity, income and finances support. The benefit of doing so is that your payment is much lower right out of the gate. Another thing to give some consideration to, is that because your expenses are less you don’t have as many deductions granted you still get to write off your interest and your property taxes ,but the expenses you get to write off on a property like this or of course going to be less than $750k home. If this is in a good area, but not considered to be like a great you’ll get home equity and appreciation and all the other benefits of homeownership. This includes loan balance pay down just as you would for the $750k home.

At end of the day the moral of the story here is don’t be overly concerned about the more expensive home right now think long-term because whatever interest rate you get on mortgage loan is temporary at best. For example, the $750k home carrying the payment you don’t particularly like is temporary until you can refinance anyway. When you go to refinance you save $400 a month (approximately)  thereby making the $750k home far more affordable long-term resulting in an overall better financial play than the lower priced home. Bottom line- if your budget supports it, buying a home at or slightly above your budget as long its justified could be smart long term play financially.

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