Should You Buy a Big or Small House?

Is a big house always better?

Not always, especially when it comes to home buying. In actuality, it may be wiser to go smaller—below what you can afford. Ultimately, it depends on the needs of you, your spouse (if applicable), or your family (again, if applicable). More often than not, though, a smaller home will more than suit your needs. Here are a few things you should consider when making your decision:

What does your future look like?

Are you currently supporting a family or plan on starting one? If so, you should look for a house that will suit your needs as your family gets bigger and its needs change. It would be unfortunate to purchase a two-bedroom home and then be surprised when you find out you have triplets on the way—those kids won’t want to share a room forever. With a smaller house, there’s always room to be inventive. Consider, instead of buying a three-bedroom home with plans to convert one into an office, fix up the attic or turn the living room into a multi-purpose area.

On the flip side, though, a bigger house means more costs related to maintenance, taxes, energy, and other expenses. Additionally, you’ll find tasks like cleaning to be much more cumbersome in a larger house, meaning you’ll have more time to do the things you enjoy doing, like your hobbies… unless cleaning’s one of your hobbies.

If you plan on having children, you should also consider weighing the importance of giving them more space and saving enough money to put them through school, or paying for the things they’ll find necessary as they grow older: fees for school trips, sports, clubs, and other extracurriculars, for example.

You also have your own future expenses to think about, like your retirement. A recent survey has revealed that average, middle-class Americans only have savings of around $20,000 set aside for retirement. Even more shocking, a third of middle-class Americans haven’t contributed to their retirement at all – and continue this behavior.

Life is full of surprises.

Having enough money to manage unexpected expenses is crucial. Saving the cash you’d otherwise spent on a needlessly larger house means you’ll be prepared in the event of you or your spouse losing a job, getting into an accident, or any other hardship. Having some leeway with your budget will help equip you to face some of life’s most common adversities. Passing on purchasing a large home in favor of a small one will guarantee you’ll always have money set aside for emergencies.

Best of all, in the case of mortgages, buying a smaller home means you’ll potentially be able to pay everything off quicker, meaning you won’t be in debt to the bank for the rest of your life. Think about it: Is owning a large, multi-bedroom mansion worth more than enjoying the freedom of a debt-free life after you’ve paid off the mortgage on your smaller home? We think you’ll find the answer is no.

Maybe you’ll find owning a larger house is best for you—that’s fine. For most buyers, though, a smaller house can prove more than sufficient for their needs, especially it has room to grow along with them.

About the Author

Before opening On Q Financial in 2005, John Bergman originated and funded 450 units a year as a loan officer. He founded the company with just $1M of personal life savings—committed to his vision for building the best independent mortgage organization in the industry.

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