As you talk with your friends, family members and co-workers about your dream of buying a home, sometimes you may hear some of them say that you should consider "stretching" when buying a home. This phrase often refers to buying a home that will initially account for a greater share of your budget in anticipation that your income will continue to rise as you gain more experience in your career. In other words, your budget will be tight when you first buy a house, but will adjust as your income grows over time.

Buying and adjusting to owning and maintaining your first home can be an overwhelming experience. Understandably, the desire to buy a nicer home or a home with a little more space can be tempting. However, it's wise to consider the big picture of how much stress that paying for such as home may put on your finances. For example, to afford a larger or nicer home, are you willing to forgo variable expenses such as an annual spring trip to Mexico, a subscription to a favorite magazine, or cutting back on eating at nearby restaurants with friends? If you decide to pay more for a house, are you willing to sacrifice other expenses?

Stretching to afford a home that is beyond your budget may put you at risk of losing your home if you cannot afford the monthly payments. For example, if you suffer a job loss or a decrease in salary, will you still be able to make your mortgage payments? Unlike most other monthly expenses, which can be reduced fairly easily when you are short on money (such as canceling your cable service or not eating out), your mortgage payment cannot easily be reduced or delayed. Failure to make your monthly payments can have very serious consequences and you should not overestimate how much you can afford to pay for a home.

Ultimately, it's your responsibility to determine how much risk you can tolerate, but keep in mind that you can enjoy a great deal of peace of mind by sticking to your budget. For many, this means, being able to comfortably afford a home while still being able to enjoy many of life's other pleasures.