JMO, but I'd go for the nicer subdivision and the 30 year loan. You have to live in the house, why get something less than what you have. You can make an extra mortgage payment here and there when you have it to cut it down from the original 30 years, or add a little to each months mortgage payment to equal an extra payment a year. Usually your income goes up, not down, so the payment becomes less of an issue in the future.

At your age I would definitely go for the nicer house. The length of your mortgage is really not that important, as the odds of you staying in the house long enough to pay if off are pretty slim. Meanwhile you should enjoy your home. Plus, what you find desirable now will also be more desirable when you eventually sell.

I thought first too you should go for the better house, bigger mortgage. Conventional wisdom is that people "grow" into larger payments, so long as you don't bite on a teaser variable rate or anything like that.

BUT, since you are 30 and 27, any chance one of you would want to stay home with little ones in the near future? Anticipating a single income due to job loss is maybe too conservative, but if kids are in the picture, that's a different situation and the flexibility might become important.

I was in a similar situation, I under bought, big mistake

You can always pay off the 30 year mortgage quicker. We pay an extra 20% each month when we can afford it

The monthly payment on an additional $50K amortized over 30 years isn't such a huge leap, considering your age and the likelihood of your income increasing each year. And, as you pointed out, your equity will appreciate more in a better neighborhood. Remember, the three most important things to consider when you invest are location, location, location.

I agree with location, location, location. To me, that's the number one rule in real estate. Get the smallest house in a nice area if that's what would make a deal work for you. But get the nice area.

Go with the house that you will want to keep, so long as you can reasonably afford it. The cheaper house may work for you now, but do you want to shell out for all the realtor/tax/closing costs in five years if you decide that you have outgrown it?

I've just read an article in The New Yorker about long commutes. Atlanta was one of the cities featured. I hope you will put a lot of weight on buying where your commutes will be the shortest possible. The beautiful house in the boonies is useless if you never see it during daylight hours! That's MY pitch on the location thing. If you plan to have a family, schools are a consideration (or the money for private schools).

The smaller house in best location is always a winner. You will enjoy the nicer area; neighbors will likely mantain their properties; it will appreciate better. Beware the house where resale will be undercut by brand new housing in the same area. Must you buy in a "subdivision"?

Our "starter house" turned out to be good enough for 30 years. It was a stretch but we were young and our earnings increased. We didn't have expenses buying and selling and moving and redecorating. The area had top schools and held its value.

Only you know what would be too much "stretch". It's no fun to be "house poor", postponing living your life because you "can't afford it" yet.

If it were my choice, I'd stay where I was, buy a couple of economical cars and make the commute. However, I do prefer having the land and can't figure out how people live on zero lot line property! âº

I know there are multiple factors in making such a decision, one being as someone pointed out - what if you have kids? I'd love the acreage for them and your wife could be a stay home mom, because of an affordable mortgage. In addition if Atlanta "sprawls" the way so many other large cities are, your 40 mile commute and boondocks house might not be either in even 10 years.

It does make sense to get what you want but I do believe you can find a house in the lower price range that you would be very happy with. I don't think you have to compromise and buy a house you absolutely hate! Look for a house in a cul de sac. You get more privacy and more land (most of the time). Look for a house in an older subdivision. It's going to take a lot of getting out there and looking! Sure, you can make an extra payment or send a little extra in each month, but in reality, how many people who say they are going to send in that extra money ACTUALLY do it?

Have you thought about how expensive child care is for the future little one(s)? Consider the "what ifs" like if your child was sick a lot and your wife had to give up her job to take care of your child? The big question to ask yourself is can you make the house payment, car payments and all the other bills just on your salary?? Don't most moms like to stay out of work with a newborn for at least six months or longer? If it's imperative that you MUST have two incomes EVERY month, then I would go with the lower mortgage.

If you have everything tied up in a higher house payment, it's less vacations you can enjoy, less cruises! Don't forget to figure in $400-$500 a month for child care. Don't stretch your budget so much that you would be living/working only to pay the bills with no freedom to enjoy the important things like a cruise to Alaska! I guess I just think of all the foreclosures that are in the millions, and I wouldn't want this to happen to you.

I started paying extra every month after one year on a mortgage that is 10 years old. Have not missed a payment even when we had some minor hiccups

Location, location, location is always the cry when buying.

I like with location - financial, financial, financial!!!!!

Your mortgage payment should be no more than 25% of your monthly income. Total cost, including taxes, utilities and the like should be no more than 33% of your monthly income.

So as you look to more expensive housing, temper that with the financial reality of home ownership. You don't want to become house poor!

Enjoy the journey.

eal51 in western CT

I live in Marietta. You will have many fewer choices at the lower range. At your age, a longer term mortgage is not a problem. Option 2 will get you a nice home in a good neighborhood on a nice sized lot, perhaps 1/2 acre or more.

Oh, since somebody else brought it up...I'm going to piggy-back on eal51's post & say that you should also be funding your 401(k) at minimum up to your employer's match before calculating what you have available for mortgage payments. And, if you don't already have it...take 3 month's living expenses & tuck them away out of the equity from your current home when you sell. What's left is what you have available for down stroke on the new digs.

Sorry, the banker in me just can't help it. :(

Tricia