Should you buy a more expensive home?

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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RELATED MORTGAGE ADVICE FROM SCOTT SHELDON

When buying a home, it’s natural to want the lowest mortgage rate possible. But sometimes, chasing a slightly better rate from another lender—especially after your offer has already been accepted—can backfire in a big way. Let’s walk through a real-world scenario. You’ve got an offer accepted on a house. You’re working with a lender who has you approved, documents in underwriting, and a 21-day close of escrow in place. Everything is moving forward. Then you hear from another lender offering a rate that’s 0.25% lower, with slightly better closing costs. It’s tempting. But before you make a jump, here’s what you need to consider. Switching Lenders Comes with Time Costs When you pivot to a new lender mid-contract, they’ll need to: Re-underwrite your entire loan, Order a new appraisal, Disclose and sign new loan documents, Submit the file for final loan approval, Schedule and fund closing—all over again. This doesn’t happen overnight. Even in ideal circumstances, the new lender is likely going to need at least 25–30 days to close. If you’re in a fast-moving or competitive market, this is a real problem. Most sellers won’t grant a contract extension just because you’re switching lenders. So, what happens next? A Contract Extension Can Jeopardize Your Deal Asking for a contract extension means the seller must agree to delay closing. But that delay introduces risk—especially if the seller has backup offers or simply wants certainty. They may not grant the extension. Or worse, they could cancel the deal outright and take another buyer’s offer. Even if the seller agrees to extend, your earnest money and negotiation power could take a hit. And for what? A slightly lower rate that might save you $50 to $75 a month? Mortgage Rates Aren’t as Far Apart as You Think Here’s the truth: all mortgage lenders get their money from the same place—the bond market. The pricing differences between lenders usually range from 0.125% to 0.25% in rate on any given day. If one lender seems to be offering dramatically better pricing, the first thing you should ask is: How? Head over to FreddieMac.com and check the average 30-year fixed rate posted weekly. This is one of the most reliable benchmarks for where rates truly stand in the market. If a lender is quoting you a rate that’s well below that average, ask for the details: Are they charging extra points? Is this a teaser rate with a prepayment penalty? Is it based on a different loan product or risky structure? Often, what sounds “too good to be true”… is. Consider the Bigger Picture Think long-term. If you’re financing $600,000, a 0.25% lower rate may reduce your payment by roughly $75/month. But what if you lose the house and have to start over? That monthly savings doesn’t mean much if you’re outbid on your dream home or lose your deposit. Also, remember: you’re not going to keep this rate forever. Today’s homebuyers typically refinance when rates drop by about 0.75% or more. So if rates fall within the next year or two, you’ll likely be refinancing anyway. Instead of paying extra points now or risking the entire deal for a minor monthly savings, it may be better to accept a slightly higher rate—knowing you’ll refinance when the time is right. The Real Risk Isn’t the Rate—It’s the Delay When shopping for a home loan, don’t just ask, “What’s your rate?” Ask: Can you close on time? Is this rate sustainable or based on hidden costs? Will switching lenders delay or jeopardize my contract? A home purchase contract is a binding agreement between you and the seller to perform within a set timeframe. If you can’t meet those dates because you're chasing a slightly better rate elsewhere, you may want to reconsider if now is the right time to buy. Final Thoughts Yes, interest rates matter. But execution matters more. Before making a switch mid-transaction, talk to your lender. Have an honest conversation about pricing, timelines, and strategy. You might find that staying the course, securing the house, and planning to refinance later offers a better path to financial security. Want to Know Your Options? Let’s compare rates and strategies the smart way—without risking your dream home. 👉 Click here to get a custom rate quote today.

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