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3 Reasons Why Bigger Houses Aren’t Always Better

A 1923 Craftsman Bungalow Home
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Buying a home is a monumental event in your life and investment in the future. While you may have narrowed down your list of must-haves and the location of your dream home, the decision to purchase a sizable home may have you feeling uncertain. A greater amount of square footage may certainly be attractive but are bigger houses the best long-term choice?

What you can afford vs. what you need

After working hard to ensure your credit score is good and your debt-to-income ratio is in line, finding out your lender has approved you for a large mortgage can be exhilarating. But just because a bank approves you for a sizable mortgage doesn’t mean you have to max out your buying power with a big mortgage payment. No one wants to be “house poor” and live in a large, beautiful home without the ability to furnish or maintain it.

Step back and consider why you want a big home. Is it necessary? A family of five or a household with extended family living together may require a home with a greater footprint. But if a smaller home with two bedrooms and one bath would suffice and you’re considering bigger houses for the “wow” impact, take a hard look at what is motivating you to make a more extravagant purchase. Think over how much space you truly need.

Also, take into account the location of the home. If you’re considering moving to where you can get more land or a larger lot, will you be farther away from friends, family, or amenities such as grocery stores, restaurants, hospitals, and schools? If you have children, is the layout so big it might discourage small children from playing and interacting together? Will you be able to monitor them easily? Are there sidewalks or bike paths or is the house more isolated?

Hidden costs of a bigger home

The lure of a big home is real. Who doesn’t dream of a theater room, three-car garage, gourmet kitchen, or spa-like master bathroom? While it’s tempting to go big, keep in mind bigger houses translate to bigger bills — starting with closing costs. Homeowners need to think not only about the mortgage, but the overall expenses in owning bigger houses. The bottom line? Owning a bigger home costs more.

Your mortgage is just one piece of the financial equation when purchasing a home. The larger the overall square footage and acreage, the greater the property taxes and homeowner’s insurance. Your utility bills will be larger, too, as it undoubtedly costs more to keep the lights on and temperature regulated. Many larger homes come with multi-tiered heating and cooling systems that enable temperature regulation on each floor. However, if your big home has only one zone for heating and air conditioning, your unit will have to work overtime to heat or cool your house. Use an affordability calculator to estimate what mortgage payment will work best for your budget based on your income, mortgage down payment, and monthly debts. Sit down and crunch the numbers for a realistic new home budget.

Maintaining your home long term may take a larger chunk of your savings than expected. Money spent on cleaning supplies or services (along with time spent keeping everything in tip-top shape) can quickly add up. Exterior and interior repairs as well as cosmetic upgrades or renovations such as hardwood flooring, tile, or carpet are larger. Simple items like keeping your home tech savvy with whole-house internet or a home security system may require a W-iFi extender or additional wiring installed by an electrician. Bigger houses equal bigger rooms which translate into a larger quantity of furnishings to fill your home. Plus, replacing major utility items like furnaces and air conditioning systems for sizeable homes can be pricier than for a home with less square footage.

Will a big house be a big selling point?

Bigger houses and their resale value need to be considered carefully. Buying a house is a major life decision. Think through whether you’ll get a solid return on your investment by looking at the pros and cons. Will the buyers after you pay a premium for a large spacious home or be turned off by the high property taxes, utilities, and overall maintenance?

This is where pre-home purchase research is essential. Review current home sales in your area, including their list price and final sale price. Is there a trend within the community on types of homes being purchased?

The economy also plays a major factor when selling bigger houses. If a bigger home is in an area with newly constructed apartments and townhomes, step back and assess if your large home will be attractive to people moving into the community. Will specific demographics such as retirees and senior citizens be deterred because of too many stairs or other mobility challenges?

Whether it’s a buyer’s or seller’s market, the ultimate factor is finding a pool of buyers who are approved to purchase a larger home. If your home is located in an area where the cost of living is sky high but the average annual salary is low, bigger houses may be overlooked.

Also, consider housing trends. Are families in the area choosing to downsize due to inflated taxes, mortgage costs, job market struggles, or simply to embrace a minimalist lifestyle? Take time to review the multiple factors that go into the purchase and sale of a large home.

The bottom line

Bigger isn’t always better. Before locking into that five-bedroom beauty on an acre of land, take an objective look at how this purchase will affect you long term. If you purchase a big home will you still be able to continue to build your nest egg and retirement funds? Many individuals and families purchase a starter home smaller in size with a lower budgetary impact. There is always the option to upgrade to a bigger home in the future as you and your family grow.

Create a list of the pros and cons of bigger houses. There is not just one decision-making factor. Consider what size home realistically meets your family’s needs and the available income to pay the mortgage and other expenses. Will you be able to pay your monthly bills with ease, even with unexpected costs that may pop up? Or will purchasing a bigger home create a stressful environment? Analyzing these factors will help you make the decision best for you and your family’s well being and financial security.

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