Should I exceed my budget for the right house?

First you need to determine what your budget is for your home based on your yearly income, debt, and other expenses. You will also have to determine what kind of debt you have- is it good debt or bad debt. Good debt is an investment; you’ll get back the interest you pay and then some (i.e. car loan, student loans, or even a mortgage). Bad debt doesn’t raise your earning potential in the long run. You’re financing today’s happiness at the expense of tomorrow’s security.

Next you need to determine how much you should save for the down payment on a house. It is recommended you save about 20% of your income and allocate it to a “rainy day fund,” pay off high interest debts, ax out your 401K/IRA, and investments.

Finally, ask yourself “how much should I spend on a home?” It is recommended you spend about 25% of your income on mortgage payments. Finding the right home on your budget is ideal but exceeding that budget may be dangerous. A home that fits into your budget may be the correct and safe answer but it may not be the right home for you. Considering asking yourself if you want to live comfortably or if you want your all of your hard earned money to go towards your mortgage each month. The right house can be found within your budget or can be remodeled to be the perfect home for your family.