Key points
- In today's tight housing market, you may feel compelled to compromise as a buyer.
- While it's good to be flexible, there is such a thing as straying too far from what you want.
- If you don't like the neighborhood, or the home will need a lot of work to be what you want or need, it may not be the right fit for you.
1. You're stretching your budget to make a purchase happen
You might set a home-buying budget of $350,000 only to find a truly ideal property where the seller won't budge at $360,000. In that situation, you might make the case that paying a touch extra for a home is worth it.
But if your initial budget is $350,000, you shouldn't be willing to stretch that to $400,000 or $425,000. Doing so could mean signing up for a world of financial stress.
As a general rule, your monthly housing costs, including your mortgage payment, property taxes, and insurance, should not exceed 30% of your take-home pay. If going beyond your original home-buying budget means surpassing that 30% mark, you'd be well-served to pass on the home you're looking at and hold out for one that's more affordable.
2. You're signing up for a world of repairs
It's common to buy a home that needs some work. But there's a difference between having to make some minor fixes and cosmetic changes versus having to gut your home, upgrade all of its electrical wiring, and replace major appliances. If you're looking at the latter scenario, you may end up signing up for more work -- and more expenses -- than you can manage.
3. You're not in the neighborhood you want
If you buy a home with an outdated kitchen, you can always remodel it when your finances allow for it. And if you buy a home that only has one bathroom, you might be able to add another in a year or two so your family can be more comfortable.
But if you buy a home in a neighborhood you're not a fan of, no amount of renovations will change that. And so if being in a neighborhood that's walkable, for example, is important to you, then that's something you may not want to compromise on. Similarly, if you have kids and want to live close to a playground, you probably shouldn't make an offer on a house where the nearest park is three miles away.
In today's tight housing market, a willingness to be flexible is important. But don't take that flexibility to too much of an extreme. Otherwise, you might sorely regret your home purchase.