When you go through the mortgage preapproval process, the lender will tell you how much money you can afford to borrow to buy a home. You can stick with the amount the lender tells you, or you could choose to buy less house than this amount. If you want to protect yourself financially, here are four reasons to consider buying less home than you can afford.
You Can Avoid Being House Poor
Spending too much on a house often leads to a person becoming "house poor." Do you know what this means? Being house poor means you have a beautiful, big home but cannot afford anything else in life. You might be able to pay your bills without any problems, but you would have no money left to use for anything else in life. If you do not want to live like this, you should consider spending less on a home than what you can afford.
You Will Be Prepared for Life Changes
Buying less house also protects you if something in your life suddenly changes. For example, imagine if you lost your job. You suddenly would have less money coming in, but you might still be able to afford a lower house payment as opposed to a higher one. Life can change without any notice, and buying less house is an excellent way to prepare for changes like this.
You Can Save More Money for Retirement
If you buy less house, you will have a lower mortgage. Having a lower mortgage means you will get to keep more of the money you earn. You could use this extra money to save more for your retirement. At retirement, you will be glad you saved as much as you did.
You Will Be Able to Enjoy Life More
If you have extra money each month, you could also use it to enjoy life. You could take more vacations, or you could buy that classic car you always wanted. Having more money in your pocket gives you options and leaves you with fewer worries too. If you want to protect your finances, choose a less costly house.
When buying a house, you should feel comfortable with the amount you spend on it. If you are interested in purchasing a more affordable house so you can reap these benefits, start looking at homes for sale in the price range you decide that you can afford to spend.