Constructed from inspirational Instagram feeds and reality TV, the dream home floats in the imagination like a castle in the sky but dissolves in the rain of hard numbers.
Chasing the dream can lure buyers to overextend themselves financially. On the reverse side, the high prices can cause first-time home buyers to delay a home purchase and the opportunity to start building home equity. For many homebuyers, buying a “good enough” home can be a sounder strategy, particularly for those most eager to become homeowners.
Here’s the beauty of a good enough home.
It has the essentials
A good enough home may not have artisan tile or stainless steel appliances, but it has the essentials. When you’re searching for a home, look for one with “good bones.” Focus on basics like windows, the roof and the heating and air conditioning system. Then you’re less likely to face surprise repairs just to make the house functional. A well-maintained home in a good location will likely increase in value and probably won’t be a money pit.
Buyers tend to focus on the cosmetics. If you can’t have it all, and most people can’t, list the features you want, and decide where you’re willing to compromise.
It fits your lifestyle
While you do spend time at home, make sure that your commute to work will be reasonable. “Good” is personal. A big yard could be a must for a family with a dog, but a pain if you hate yardwork. A good home matches your timeline. It should meet your needs for the years you plan to live there, which probably isn’t forever if it’s a first home.
It doesn’t squeeze your budget
A good enough home fits your budget. Rule of thumb recommends keeping your debt-to-income ratio under 30%. That’s the percentage of gross monthly income that goes toward debt payments, including the mortgage. Lenders will qualify buyers with considerably higher ratios. But that may not leave much for other expenses.
A good enough home leaves you with enough money for other priorities, such as saving for retirement and emergencies, and for all the costs of ownership besides the mortgage. That includes home insurance, property taxes, utilities, maintenance, and updates.