These days it seems that Americans may be willing to make some risky moves to buy a home. If you’re considering taking a chance, one of the first questions you need to ask yourself is, “How much can I really afford?”

Mortgage rates are once again above 4%, and after a December rate hike of 0.25%, the Federal Reserve is expected to make additional increases to the federal funds rate. French Bank BNP Paribas SA predicted in January that rates would rise again in the second half of 2017, followed by quarterly increases in 2018. All of which means that buying a home isn’t getting any easier. 

4 Risky Moves to Buy a Home That Are Happening Today

So what does this mean for buyers who are gearing up to buy a home this year? According to the Owners.com 2017 Home Buyer Study of more than 1,000 consumers considering a home purchase in 2017, it seems as if many prospective buyers are willing to let certain financial priorities take a backseat to home ownership. (For more, see Finding the Best Mortgage Rates in 2017.)

In terms of what buyers are sacrificing to land a home, the study reveals two broad trends. Overall, buyers are cutting spending, but they’re also trimming down what they’re saving for emergencies and retirement. For example:

  • 76% of buyers said they’re skipping investments in stocks as they prepare to buy.
  • 72% aren’t contributing to other investment funds.
  • 61% have put contributing to their emergency fund on hold.  

And in a move that’s tangentially less risky, but not for long-term health:

  • 84% have stopped gym memberships or fitness classes. 

The reason? Nearly seven in 10 consumers included in the survey said they were concerned about not having enough cash for a down payment. They were also worried about increasing interest rates, getting locked into a bidding war for a home and the long-term affordability of their mortgage.

Owners.com president Steve Udelson remarked on what may be driving buyers to re-prioritize their financial goals in a press release: “Market pressures are forcing consumers to take necessary action to stretch their purchasing power. Buying a house is a worthwhile investment for many people, and consumers are demonstrating a willingness to make sacrifices to achieve their goal of home ownership.”

What Else They’re Giving Up

Not all the moves are risky. Dining out (87%) and clothes shopping (86%) are also in the top expenditures consumers are cutting out. And then they're giving up some "dream home" ideas.

Beyond cutting back on saving and spending, buyers also expressed a willingness to buy a home that doesn’t meet all their criteria if it allowed them to stay within their budget. Fifty-one percent of respondents said they’d consider buying a fixer-upper, while 36% said they wouldn’t discount buying a smaller home. Surprisingly, 28% said they’d be willing to do some of the legwork of buying on their own to avoid paying high fees or commissions to a real estate agent. (For more, see Do You Need a Real Estate Agent?

Is It Worth It?

Real house prices have jumped by 2% year over year, according to First American’s Real House Price Index. Paired with the prospect of rising interest rates and President Trump’s recent decision to eliminate a mortgage fee cut, which would have saved first-time home buyers seeking FHA loans an estimated $500, it’s easy to understand why buyers may be feeling pressure to get into the market now. 

But is it worth it? Luis Rosa, a certified financial planner and financial advisor with Haydel Biel & Associates in Pasadena, Calif., says that the kind of behavior exhibited in the Owners.com study is typical of first-time home buyers: “Because the future of interest rates and home prices are unknown but most likely expected to rise, it’s not necessarily a bad idea to temporarily forgo certain future goals in order to purchase a home if you can afford to.” As long as buyers don’t lose sight of those other priorities, he adds, they can make it work.

Nicole Peterkin, a financial advisor with Peterkin Financial in Quincy, Mass., cautions buyers to be aware of the risks: “Feeling that the cash that’s been saved for a down payment isn’t enough is usually an incentive to cut back and save more if the house is that important, but then you have homebuyers putting every penny they’ve saved into a home.”

That creates trapped equity, and there’s a cost and lack of liquidity associated with accessing that money. Peterkin says that homeowners may find themselves trying to play catch up when it comes to building their safety net or investing for retirement. In that scenario she recommends that buyers consider purchasing a home that’s less of a stretch financially, so they can still save and invest while making home ownership a reality.

The Bottom Line

The housing market remains strong despite rising interest rates, but buyers should be aware of how that could affect their ability to get a mortgage. The Owners.com study suggests that for now consumers are taking the goal of buying a home seriously, even if it comes at the cost of their savings.

If you’re considering a home purchase this year, just be sure you focus on your whole financial situation before you make your move. It is also beneficial to extensively research interest rates using a mortgage calculator so that you can estimate the total cost of your new home if you are not buying with cash. 

Aside from considering today's interest rates, remember that a Delay in Retirement Savings Costs More in the Long Run: You have to save much more to achieve the same result. Doing the math of your various choices will help ensure that you strike the right balance between your short-term and future goals.