The Real Estate Trap - Will You Get Caught?

Buy up. More square footage is always better. You shouldn’t down-size. Your payment will stay the same, but your wages will increase over time. The bigger the house, the bigger the tax break. It’s only another $30 dollars a month.

If you’ve been in the real estate market, past or present, you’ve heard most (or all) of the previous statements. But do they really make sense when considering a home purchase? Maybe not. Each person in the buying market must decide what it truly important. Status is a big one — more than most people would admit to. Using your home as an equity vehicle for retirement is another. The security of putting a nail in the wall without asking the landlord first can motivate those who crave independence.

Through it all, let’s not let the hype and sales techniques sway our reasoning.

Buy up. — Why? You don’t have to. If the square footage and mortgage payments are something you are comfortable with, then make a lateral move if you have to make a move at all. I know that jobs and neighborhoods change over time, but that doesn’t mean that you are obligated to buy up when you do move. It’s your decision. Weigh the financial benefits, how much money you want left at the end of the month, your job status (or future status), family status (kids, etc.), then do what is right for you, not what your real estate agent or banker tell you.

More square footage is always better. — Not necessarily. Is it finished footage or unfinished? If unfinished, do you have plans to make it a family room, bedroom, office? Can you do the work, or will you have to take out a second mortgage to cover the cost? Remember also that more square footage means more house to clean, more heating and cooling costs, and usually a larger lot with more water, more grass cutting and more weeds. There is more siding to repaint every few years. Taxes are more. So is insurance.