The best isn't always the biggest. Today's market further illustrates the wisdom behind the real estate adage, "Location, location, location". As gas prices continue to rise, and cost of commuting overshadows the desire for new and big (for example, big houses in Antioch and Pittsburg for homebuyers who commute to work in San Francisco or Oakland areas), it becomes even more important to put weight on location and lifestyle.

Does any one remember the book called "Life's Little Instruction Book"? I believe one of the advice is to buy the best house one can afford without sacrificing having a life.

Don't be real estate rich but cash poor that you can't even enjoy an occasional night out on the town.

As a Realtor and an investor, I recommend buying the biggest and best in the price range that you are comfortable with. If a lender tells you that you qualify for an $800,000 home......but the payments will limit your quality of life...look for a lower priced home.

Interest rates are still low....there's plenty of inventory to choose from...and it's a great time to buy. Good luck!

Peter:

Good advice below. Let me add a couple of things. The old adage, “Never put all your eggs into one basket,” is becoming truer all the time. It seems that some segment of the economy is always in trouble. Although I personally believe that real estate is the overall best investment, I believe you should divide your investments up so that if one is hit, the other can sustain you. To use another maxim, “a stool of three legs is always stable.” Make sure you have money in some sort of a savings vehicle to sustain you in the event of an emergency or loss of job. Pay a prudent amount into balanced investment vehicles as well. The more assets you have out there working for you at any given time, the better your chances of never being caught off guard.

Lastly, develop a world mindset. Those of us who live here in the USA need to be aware of how truly blessed we are in relationship to much of the rest of the world. A large house is not a priority in many parts of the world. We could certainly benefit by choosing to live more within our means (smaller homes, vehicles, etc.) and donating a portion of our funds to areas of the planet that desperately need food, shelter, clean water and sustainable incomes. Just a thought.

Hello Peter,

Should one buy the best and biggest home…it may depend on some factors of one’s life style

1. Your current age
2. Your saving habits
3. Your Job strength
4. Your position at job
5. Chances of getting another job… just in case you loose the job
6. If self employed, what the chances of making same level of income in down turn market
7. Your social networking or family life style
In my opinion, one should buy the best and biggest home that they can afford, because prime residence’s interest and property taxes are excellent tax shelter.


Front end Ratio: I would say your Principal+ Interest+ Property Tax+ Insurance (PITI)
these 4 should not exceed 35 to 38 % of your gross income

Back end Ratio: PITI + all other payments (i.e. car payment, credit card payment, student loan, child support, or any other payments) should nor exceed 42 to 45% of your gross income

Banks underwriters the loans/ approval ratios depending on some or more of the following factors

• Down payment
• Credit history /Fico scores
• Length of your job
• How long you been in the same working field
• Demand of that position/job in the market place
• Cash reserves
• Property Appraisal value

I have lending and Real Estate experience for over 17 years.

If you are interested in more information feel free to call me at
My cell 510-381-2105 or email me at CharoBhatt@gmail.com

Best of luck,

Charo Bhatt

The rule of thumb used to be 3 times your gross annual salary.

But you should also look at your monthly budget. How much can you comfortably pay each month for a house payment? If your net monthly paycheck is $2,500, then a house payment for you might be $1,000/month at the max if you have a lot of debt and/or a family. But if you don't have any debt or kids, you might decide to go up to $1,200/month.

Usually if you have a monthly amount that you can afford in mind, you can call a mortgage broker and they can help you get pre-qualified for a loan that you will be able to afford. A good mortgage broker will usually include a break down of the estimated payment, insurance, taxes, & PMI.

When making your montly budget make sure you allow enough cushion for maintenance of the house, rising gas prices, etc.

I think you should buy as much house as you want or need; buying the biggest/most expensive house you qualify for can put you in a very difficult position if your employment or financial picture changes.