My Lottery Dream Home Explains Why A Home With A Higher Price Tag Is Sometimes Worth The Splurge
Packing up your belongings and moving to a new home is a significant decision, especially for first-time home buyers. When looking for new homes, most people must face one of the trickiest choices: to splurge or not to splurge. At first, it will likely seem like the better choice to save money by choosing a less-expensive home under your budget, as the money you'll be saving will make you feel responsible and pragmatic in the short term. However, making the strategic decision to invest in a home you love with a higher price tag can be worth it, according to "My Lottery Dream Home."
In an episode of the show, a woman chose to buy a move-in ready home that was fancier than the other choices — and with a higher price. The elegant home's appliances had warranties, and the woman said, "There's nothing to be done there ... it was just a beautiful house," per Imgur. Of course, most people don't end up winning the lottery in real life and purchasing such extravagant houses. But there's still a lesson to learn from that episode: sometimes, the right home is worth the splurge.
The pros of splurging on a home
Many replaceable items, such as trendy new jeans you'll only wear once, aren't worth splurging on. However, a home is different. You spend so much of your life in your home that you should only commit to a new house if you know you'll enjoy living there.
A home providing enough space for you and your family or housemates in a location that works for your lifestyle will be worth paying the extra money for, especially if the other home options won't work for your needs in the present and future. Althea Smock, a real estate agent with ZAPA Realty, told HGTV: "...people who are used to apartment living and changing houses like outfits will find themselves in a bind when they finally buy because the house no longer fits their needs a year later."
Also, a home is an investment. "Owning a home is how most Americans build wealth. A portion of every housing payment made by a homeowner is applied toward paying down the home loan balance (principal payment), which increases the equity in the home and helps to build a homeowner's net worth," Carlos Miramontez, the vice president of mortgage lending at Orange County's Credit Union in California, told Forbes. If you end up selling your home in the future, splurging on one with appealing features in the present will help get you more money when you eventually sell.
What to consider before splurging on a home
While splurging on a home with a higher price tag is sometimes worth the investment, you must remember to be realistic. For instance, a house with timeless architecture and designs will typically stay valuable. However, a home with a quirky exterior and trendy interior features may not be worth as much when you try to sell it in the future. And while an elegant house can be worth the splurge if it's slightly over your budget and move-in ready, going significantly over budget on more of a fixer-upper can get you into financial trouble once you face all the extra expenses that can sneak up.
In other words, don't splurge on a home until you double-check your bank account and develop a plan to make up for the money you spend over your budget. Andy Hill, creator of the "MarriageKidsandMoney" podcast and blog, learned that lesson the hard way and eventually found success with a more realistic approach. "When you're absolutely sure you want to live somewhere for the long term, buying a home with the proper down payment and an understanding of the true costs of homeownership can be a great experience," Hill told NerdWallet.