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Buying a house doesn't have to come with regrets

Eva Norlyk Smith Ph.D.

June 23, 2014

QDear Eva,

We are barely making ends meet. My husband says it's the house we bought last year that's killing us. Insurance, taxes, a leaky toilet … He wants to sell, but I think we just need to reconfigure our budget. Any advice for a house-poor family? — Jane

AHi Jane,

What you are experiencing is pretty typical for new homeowners. As most people discover quickly, the list of unexpected expenses can be long and can continue to grow for quite some time.

It is not unusual to experience some type of buyer's remorse after a large purchase such as a house. To determine whether your husband just has a bad case of buyer's remorse, or whether there is something to his objections, look at the nature of the added expenses. If the expenses are predictable and controllable, you probably don't need to worry, and you should be able to address your cash flow problems by reconfiguring your budget, as you suggest.Ask Eva

On the other hand, if you have bought an old house with a lot of deferred maintenance that you're just now discovering, you may need to take a closer look at the purchase.

It can also be instructive to calculate your debt-to-income ratio. When you apply for a mortgage, lenders use the debt-to-income ratio as a gauge for how much mortgage you can afford.

Ideally, the debt-to-income ratio should be below 36. That means when you add up your monthly debt payments, including mortgage, taxes, insurance, credit cards, student loan payments and car loans, these payments do not eat up more than 36 percent of your monthly income. To calculate the debt-to-income ratio, use this calculator from Bankrate.com.

If your ratio is below 36, it means that you should be able to make those monthly payments, and it is mainly a matter of reconfiguring your spending priorities. If your debt-to-income ratio is higher, it could be a challenge to reconfigure your budget, because you won't have that much leeway.

In the overall picture, while it seems as if you're sinking a lot of money into a house, it's not necessarily money that is gone for good. As long as the house you bought is in good shape and the housing prices in your area are going up, this is an investment that will benefit you for years to come. Not only will you have your own home to live in, but you will benefit from the increase in value when you sell the house.

On the other hand, bailing early will almost surely lose you money. Even if you get the same price you paid for the house, there would be the 6% realty agent commission, plus moving costs. You'd have the additional expenses from renting a house or apartment, which simply puts money in someone else's pocket. And that's not counting the psychological stress of having to find another place to live, packing up your house and moving again.

Consider contacting a non-profit credit counseling service for advice on how best to reprioritize expenses and control costs. In another couple of years, when your house has increased in value, you will be happy you stayed the course.

Got a question for Eva? Send her an email.