NEW YORK ( TheStreet) -- With interest rates at record lows, it's hard to ignore the constant "buy now" real estate pitches. If you're renting and thinking now is a good opportunity to see what house you can afford, you are probably also thinking about what you may have to give up to buy that house.In a survey released by Century 21 Real Estate, renters said they are willing to contribute less to their 401(k) to buy their dream home. Not a good idea, says Eve Kaplan, a financial adviser with Kaplan Financial Advisors in Berkeley Heights, N.J.
Instead of reducing or stopping your 401(k) contributions, Ron Howard, managing principal at Siena Wealth Management in San Jose, Calif., recommends reducing or eliminating some other expenses. Even if you are buying a house you can afford, Howard says, you will still need to give up certain things you were used to doing or spending on as a renter. That's because on top of your mortgage, you will have to deal with many unexpected costs as a first-time homeowner. Sure, you could afford the house, but what about the property taxes, homeowner insurance, carpet replacement, general maintenance of the home and landscaping? To pay for these, Howard says you may have to do away with exotic vacations, expensive technology gadgets, dining out regularly or going to a coffee shop every day. Now might also be a good time to give up smoking and reduce your bar tab.