Homebuying

One of the things that My wife and I did as we were deciding on how much house we could afford (which is a different argument than how much of a loan we can extract from a bank) was to perform a sensitivity analysis. We built a spreadsheet that contained a pro-forma budget with a variable house payment. We then ranked everything on a Red-Yellow-Green scale. If there was less than a few hundred dollars, but greater than zero than the payments, and subsequently the mortgage was unaffordable (and therefore red). If there was more than a few hundred dollars but less than 500, than the mortgage was affordable, but risky (colored yellow). If more than 500 dollars remained than the mortgage was affordable and low risk (green). This method, while not perfect, provided a quick visual reference that my wife and I could agree upon. It certainly made it a lot easier to have the inevitable 'I love it too, but it's too expensive' discussion.