Buying a House

I'm currently a person living in one of the most expensive areas of the country, the San Francisco Bay Area, more specifically in Silicon Valley. Sure, I could have chosen to live in a less expensive area, but my husband and I have family in the area and he grew up here, and we wanted to live close to family. Because of this, we have, with open eyes, chosen to try to find a way to live here.

When we started to look for a house in 2003, we knew that we had to stretch to buy. A modest house at that time was still really expensive. Since it was just the two of us, we didn't need a large house, but wanted enough rooms to support additions to the family, if any. So we looked at houses that had between 1100-1500 square feet.

Originally, we were looking at a much more expensive houses, but at some point we decided to lower our price range because my husband had lost his job. It was actually a blessing in disguise because it forced us to lower our expectations and to think about financial stability and responsibility. We thought that it would be best to find a house that one income could support instead of buying a house that would require both of our incomes to support. We decided to look in more affordable areas and expanded the search area. They say that the mortgage you pay should only come out to, at most, 28% of your gross income. I say, it should be at most actually 28% of your net income after taxes, instead of gross (ideally, less than 20%). We finally decided to settle down in a typical small ranch house with 3 bedrooms and 2 baths.

It took a while to get used to the mortgage payments because they were larger than our rent. I sometimes wonder if we made the right financial decision to buy a house, but there are other reasons to buy a house.

What are the pros? I love our neighborhood, I love the stability of knowing that I'll be here for a while, I love getting to know our neighbors and feeling a sense of community, I love feeling like I can do whatever I want without fear of losing our deposit, and most of all, I love that this place is mine. Also, we could take advantage of the tax deductions for mortgage interest and property taxes.

What are the cons? The mortgage payments are higher, we had to start paying property taxes, there is more responsibility in that if anything breaks, we must fix it and can't rely on someone else like a landlord, and if we ever need to move, then it is difficult to go through the process to sell the house and move.

If we were in a different position, then it probably would not have made sense to buy a house, such as if our jobs were unstable, but this was where we wanted to plant roots. This was where we wanted to raise our children, once we had them (if possible). This was where my husband's family was and where I had some good friends. It was in some sense, an easy decision albeit a nerve wracking one. After all, neither of us had bought a house before and it's difficult to put so much money down at once and commit to a large mortgage payment. The first few payments were painful, but we got used to it and adjusted our living patterns (budget) accordingly.

Buying a house is a very personal decision. They say that the American Dream is to own a house, but I didn't necessarily buy into that. A dream can quickly turn into a nightmare if you are not careful and really consider the consequences of buying. Since we had lowered our expectations, we knew that we could manage. The mortgage payments, while large, were manageable especially since we had lowered our price range for houses. Also, since we lowered our price range, our property taxes were also lower.

Fortunately, while the prices in our neighborhood did drop from the height, they have pretty much stabilized. Living in the middle Silicon Valley definitely helped keep prices from sliding down too far. In some ways, I don't think about the housing market because I know that I'll be here for the long haul. It's like a share of stock, it's not a real loss or gain until you actually sell it.