We’ve all heard that the McMansion trend is part of what sent the real estate market spiraling downward – consumers wanted the biggest house on the block, even if meant it’d put them in debt up to their eyeballs. Even worse, it extravagant housing could threaten their
retirement later life financial goals.
Finance writer for the Equifax Finance blog, Miranda Marquit, suggests buyers ask themselves the two questions before
buying a home, in her post “
How Big of a House Do You Need?” Careful thought into the answers to these questions can help buyers avoid getting trapped into buying a bigger house than they need or can afford. It can also help you understand how much of a home you need when you retire.
In considering how large your home should be, think about your family’s preferences. Do you spend a lot of time together? Then you should focus on a larger common space relative to bedroom space. Do you have a lot of out of town guests? Then you really may need an extra bedroom. Do you need a quiet space/home office to get work done? Could the office/guest room be one room? Downsizing is a big deal for retirees but many families are taking great delight in their smaller homes, as their family spends more time together, and they save money not only on the home price, but on property taxes, maintenance, utilities, etc.
When considering how much of a house payment you can afford, really think about your monthly budget and how much you are comfortable with spending each month. You don’t want to live paycheck to paycheck or stress out month after month about making ends meet just so you can live in a big house. Remember that the cost of owning a home isn’t just the home price, it’s higher taxes, maintenance costs, utilities, HOA fees, etc. And if all of your money is going toward a big house, that doesn’t leave you with the money to do the things you enjoy or to set aside extra for
saving money. This leads to the other big consideration – the WHAT IF – what if you or your spouse lose your job, your hours get cut, you’re forced to take a pay cut, etc. Can you keep up the payments and still enjoy your later years?
Visit the Equifax Finance blog for real estate, retirement, taxes, insurance, personal money management advice and more.