Should you buy the most expensive home you can afford or a smaller home?

I get his question a lot..."Do we dig deep and buy a dream home or settle for something less?"

Choosing between a smaller house in an luxury, high end neighborhood, an older, bigger house in a more working-class community or a brand-new home is not easy. If you're trying to decide, start by examining your priorities and asking these questions:

•· Is the surrounding neighborhood or the home itself the most important consideration?

•· Is each of the neighborhoods safe?

•· Is the quality of the schools an issue?

•· Do any of the areas seem to attract more families with children or adult residents?

•· And where do you fit in?

As for the return on your investment, home-price appreciation is hard to predict. All else being equal, if homes all go up in value 20%, you make a bigger profit with a more valuable piece of property. Sometimes, however, some homes go up in value faster than others. In the late 1980s, the more expensive move-up housing appreciated wildly. But during the recession that followed, smaller homes tended to hold their value better than more expensive ones.

This analysis is jsut a quide to get your thinking. At the end of the day, how much to spend on a home comes down to your level of comfort. No one can really answer this question better than you.

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