If you don't have a bottom line number and you are house hunting here in Greater Boston, get one and get one fast.
By bottom line number, I mean a number or threshold price that you won't go beyond, at least without some very serious consideration and, if you are married or in a couple, some hard-fought debate.
Sure, everyone can benefit from this, but having a budget and sticking to it is especially important here in the Boston area. After years of tough times, it remains one of the most overpriced housing markets in the country.
So what does that mean? Well if you are in that broad range of middle-income buyers, you are always going to be tempted to stretch in order to get a more palatable house.
After all, the options for middle-income buyers looking in the $300,000-to-$400,000 range, especially inside the 128 beltway, are not likely to blow anyone away.
You are likely to be faced with a house that is either too small, too seemingly dingy or with a location that takes some serious consideration, whether it be a less than ideal neighbor or a busy street.
Yet all is not lost. Some things, as Bill Kuhlman noted yesterday on this blog, can be fixed.
Old wallpaper, hideous carpet or an aging paint job can be made to go away with a liberal application of elbow grease, either your own or that of a local contractor. Some of this is just plain grunt work - my wife and I laboriously stripped decades of wallpaper, going back to the 30s, from our Natick-fixer upper and did all the interior painting.
My wife has a nice touch with the paintbrush, but I am a complete mechanical idiot with a strong back. (My Dad's idea of home repair was liberal use of duct tape and, if you couldn't find a screw, use a nail instead!) We got by.
The question really is what can be fixed and what can't be - what can you learn to live with and what are the deal breakers.
With a firm budget cap in mind, you can get down to business and sort through some of these tough choices, as opposed to figuring out ways to stretch so you can overpay for that house with the shiny paint job or newly redone floors.
So how much house can you afford? There are a whole bunch of mortgage calculators out there - most look at monthly payments.
Another more basic rule of thumb, though, is the 3-1, price to income ratio. It's long been the historic average - only during the bubble years did it rise to 4-1 and 5-1, Zillow notes in this piece.
Rock bottom interest rates may help you to stretch that ratio a bit - let us say to 3.5-1, but I would be wary of getting beyond that.
After all, if you are looking to buy in hopes of starting a family, you'll need to factor in daycare costs, at least if you both plan to work outside the home.
At one point, when all three of my children were in daycare, Karen and I were shelling out enough to pay a full-time childcare worker.
So if your family income is, say $100,000, you should be looking at, say the $300,000 to $350,000 range, and so forth.
What's your budget? And are you ready to stick with it?
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