Should this house be our home?

              Be Our
Home?
Next to choosing a wife and a career,
choosing a house ranks among the most
important decisions a man will make
during his lifetime. Sir Winston Chur­chill
put it this way, "First we shape
our buildings, and afterward our build­ings
shape us."
A house represents far more than 10
to 20 tons of building materials. It can
represent a way of life, because it ex­erts
a major influence on how a family
lives. It will also represent a major
financial investment, which will usually
overshadow all other family expendi­tures.
Housing accounts for nearly 30
percent of the average American fam­ily's
living expenses, versus about 25
percent for food.
Beyond the economics of home-buy­ing,
a house can hold enormous per­sonal
meaning to a professional man's
family, and particularly to a wife and
children—the younger the children, the
more so. Obviously, home-buying
should be done logically and sensibly,
with some good knowledge to guide
you. Even if you have bought a house
or two before and think that you are a
seasoned hand at the home-buying
A. M. Watkins, who trained as an engineer,
is a leading writer and consultant in the
homebuilding and housing fields. He is the
author of many magazine articles and four
books on housing and homebuilding. He has
contributed articles to such national maga­zines
as The American Home, Better Homes
<tr Gardens, Harper's, Redbook, and the Sat­urday
Evening Post. His latest book, just
published, is "How to Avoid the 10 Biggest
Home-Buying Traps" (Meredith Press,
$3.95). Mr. Watkins wrote this article espe­cially
for HirS Reports.
game, you can still pick up useful tips
when you go shopping again.
How much house can you afford?
In other words, what's the maximum
price to pay for a house?
A good rule of thumb is that your
basic monthly housing expenses (mort­gage
payments, taxes, insurance)
should not exceed your gross annual
income divided by 60. A man earning
$12,000 a year therefore can spend up
to $200 a month for basic housing ex­penses,
or an $18,000 man can spend
up to $300 a month. This rule will ap­ply
to a gross income of up to about
$25,000 to $30,000. Those earning
more should make allowances for a
higher income tax bracket. The rule
should not, however, be applied too
strictly. For example, a young man
going up the ladder in his job gener­ally
can expect future salary increases.
He usually can stretch the rule and
buy a little beyond his present salary
range. But he should not miscalculate
by counting on the earnings of a young
wife, who may soon leave her job to
raise a family.
There is also the hoary old rule that
says you can buy a house priced up to
two-and-a-half times your annual in­come.
This rule is obsolete, and it can
be highly misleading, because it does
not take into account possible large
variations in the actual owning ex­penses
of a house, regardless of its pur­chase
price. The real estate taxes on
one house we know, for example, run
about $500 a year, whereas the taxes
on another house we know, priced at
virtually the very same figure but lo­cated
in another suburb, run three
times that amount, or about $1,500 a
year. The second house obviously costs
more to own. In this case, it's $1,000
a year more, which isn't peanuts to a
lot of people. Yet both houses are for
sale at very similar prices.
The rule of 60 takes such housing
expense variables into account. It also
emphasizes that you should closely
determine the total annual expenses for
a house before buying so you are not
misled by considering the sales price
alone.
Besides the basic housing expenses,
other ownership bills can add up to
another 5 percent or so of your family
budget, sometimes more. There is the
cost of winter heating, which will vary
according to house size and climate.
You also can expect certain outlays for
inevitable upkeep and repair. Ordi­narily
these will run about 2 to 3 per­cent
of house price. If a major improve­ment
or remodeling is needed the ex­pense
could be even more. That's more
likely, though, with an old house.
It goes almost without saying that a
young professional man should be able
to afford keeping the appearance of
his house up to the neighborhood
standard. For his own self-esteem and
that of his family, the paint, masonry
and grounds should reflect on him with
credit.
This brings up the main differences
between new and used houses, of any
age. Which is better to buy? One of
the main features of a new house is
that it generally can be bought with a
cash down payment as little as 5 to 10
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