How to know that you have bought too much house

It is everyone’s dream to own their house outright. You work all day long and get that hard earned cash to sustain a polished livelihood profile.

But one general mistake that many people do is to buy too much house that becomes too difficult to take care of.

How can you determine whether or not you are a victim of excess property ownership?

Let’s look at the general factors:

1. You are a small family and your house has too many spared rooms:

Many well-established people, at the start of their career, buy a large house for mental satisfaction. The mortgage payments are typically high. The loan amount is huge with a longer loan term. But if they sit down to calculate, they might find that they are making unnecessary payments.

2. Basic maintenance costs are getting too high to tackle:

Normal maintenance includes house painting, blinds repairs, a little retrofitting, fortifying cracked walls, and so on. These fall under basic expenses.

If you find doing these little things expensive, then you have seriously got too much of property on you.

3. More than 35% of your income goes for mortgage payments:

This means you can’t save the amount you desire. Moreover, you have other debts to chase, say credit cards, auto loans and so on.
When this is the scenario, then you are definitely on red alert.

4. Now comes the question of vacation homes:

It is always good to have a flexible property in hand. You can use it as per your needs. This will also act as a second home. But the problem is that this is not your primary housing property.

If any such financial circumstances arrive, say job loss, switching to another state or so on, then will you be able to hold onto this property? Is this second house has good chances of liquidity? Will it be easy to sell it off? And, do you have enough equity built in times of cashing it out?

5. You think you are paying excess for insurance:

To keep it simple, the bigger the house, more will be the insurance worth. So, if you have 2 separate houses, you have to pay for two separate insurance policies.

If the second home you own is left abandoned for most of the time, then you have a lot of other things to consider. Your home will be prone to theft or vandalism and you will be unaware of repairs that your house needs. In addition, you will suffer from mental insecurity.

So before you plan to buy a new house, here are a few important things you must keep in mind to avoid purchasing extra dwelling property:

1. Your mortgage payments should not exceed 30% of your total income

Always understand your family's requirements and buy a property accordingly. Emotions don't work while applying for a mortgage. Just measure money and requirement. That’s all!

2. If you plan to live in your new home for a decade or so, then you must consider a lifetime or a long-term investment.

Get a suitable loan term with payments you can easily make.

3. If you have a small family, with your children about to move out in the coming years, then buying a big house will just be of no use.

If you can still manage the hiked mortgage payments and find investing on a big property as not a difficulty, then you can go for it. But, it is always advised to go for a bit of financial counseling before you make the decision.

4. You can consider your second home as a rental property.

You will benefit a lot by renting your property out. You will have a steady income plus someone to look after your home who can inform you in times of emergencies.

5. Pay attention to the property tax

Usually, one-quarter of your total housing cost will account for your property taxes. That’s an extra add-on payment you have to do. Again, if you go for a rental property, you will be charged income tax. So plan accordingly.

6. You shouldn’t face difficulty to pay bills and other debts.

If paying off your mortgage hampers your other debt payments and liabilities, then buying this new house could become a big burden to carry.

7. You can consider buying bundle insurance.

You can surely find some good discounts if you buy two or more policies from the same insurance company.

Last but not the least, there are many signs that show you have invested too much on a property. Whenever you find you can’t save enough for your retirement, or can’t live a decent lifestyle, but own a big house, with unused rooms, then you have bought too much.