There are many things to consider here. But one thing you want to start with is knowing what your other bills will look like under the two scenarios. With a more expensive home you may have larger utilities, or longer commute. On the other hand, what savings could you be looking at if you went with each option. Don't forget to consider the areas' appreciation! We're in a market where that is more transparent than at any other time. NOW is a great time to see if the homes that were so expensive 5 years ago are still appreciating...or severely depreciating.
Living on a temporary basis under the "strict" budget BEFORE making any commitment could be very eye opening. Try it first & see how much you can endure.
Good Luck!
Dorothy LaBar, Realtor, ABR, CTA, QSC
Rector-Hayden Realtors - Lexington KY - Wed Jul 8 2009, 11:40