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Affording a home

How to afford a pricier house in the neighborhood you love

By Laura Kapp

August 2018

When Danielle and Jimmy returned to their home state after 3 years in Germany, they spent the next 6 months looking for their first home.

“Location was so important to us!  We got used to walking everywhere while we were in Germany. Grocery stores, restaurants, beer gardens and pubs were all within walking distance of our apartment. We wanted to find a neighborhood like that,” explained Danielle, an employee relations attorney. 

The perfect spot

They found the perfect neighborhood: Bay View, Wisconsin. They also found a house in a perfect location, right across from a park, with a lovely view of Lake Michigan.   

A not-so-perfect price

But the house itself wasn’t so perfect: it needed about $20,000 worth of renovations. And the sale price was on the high side of their price range.  

“We looked at other homes in the neighborhood that were cheaper and in better shape. But we kept coming back to this one. It was in the perfect spot.  And when we found out there is a beer garden in the park in summer, it was a done deal!” Danielle said. 

They successfully closed on the house in January and spent a month painting, installing a new kitchen floor and remodeling the master bath before they moved in. 

How they made it work

So how did Danielle and Jimmy manage to buy a more expensive home and have money left over to fix it up? With direction from their loan officer, here’s how they did it:

  1. They were preapproved before starting the house hunt so they knew their price range.
  2. They used conventional financing with private mortgage insurance, which allowed them to put down 5% instead of 20%. Their mortgage payment is higher, but still within their monthly budget.
  3. The lower down payment made it possible to buy the more expensive home.
  4. Putting less money down also allowed them to keep cash for the renovations. (Compare your own down payment options in our down payment calculator.)

Related to This

Juan capote •

Was very helpful information helped me get a better understanding as well as good strategies

DAVID NELSON •

All the information helps me make a clear decision.

cee •

Definitely agree very informative article. Helped me to figure out a strategy

Mehreen Awan •

very informative

Ed •

A good way to think about what you want in a home

John Kneubel •

I understand.

Carly •

It was an informative article. Helped me to figure out a game plan to start the house-buying process

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Laura

Read more articles by Laura
Laura Kapp is the former creative director of the writing and design team at MGIC. Now she works from her 1958-ranch-style home, accompanied by dust bunnies. Her messy home office proves the saying, “Creative minds are rarely tidy.”
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