My family and I are moving to Muskego this summer, and the real estate landscape widely varies relative to our means.
Some places are very affordable, but our family of five might push out a wall at any moment. Others offer plenty of space and updates, but I'd take the mortgage up to our eyeballs.
So how much should you pay for a home?
Wisdom says buying in the middle of your price range is most prudent, but how do you find that middle point?
We've started off by adding up the other normal expenses of life: groceries, gas, baseball rec league, etc... Although it's tempting to consider the rest up for grabs on the mortgage, we've found it important to invest beyond our present moment. Retirement and giving to church or community causes take a big bite out of our budget, but but it's meaningful in the long run.
Once again, we'd love to take the remainder of my paycheck and consider it our house payment, but does that leave margin for the expected? Medical emergencies, car problems, or job loss can throw the best of us for a loop. Heck, simple increased costs of living could hit just as bad in the long run.
I think the way forward with mortgage margin is to start by adding up all the other costs of life, then figure out what monthly payment can be made, and finally put that payment on a 20 year (or even 15 year) mortgage to discern your target closing price. Even if you go with a 30 year mortgage, the 20 year filter helps you buy something that should treat your family well while also giving a bit of margin for the future.