This Is Suze Orman's Best Home-Buying Advice

If you're buying a house, this is an Orman suggestion you need to read.

Personal finance expert Suze Orman has given advice for decades on making smart financial decisions, including lots of advice about buying a house. Some of her tips are better than others, but there's one Orman tip every would-be buyer should listen to.

Home buyers should seriously consider this one tip

Orman provided her best home-buying advice in a blog focused on retirement savings. In explaining how people could save more to build security in their later years, Orman said, "Buy the smaller house." She went on to explain that "bigger is not better. Period."

This news may seem counterintuitive to those looking to buy the best home they can afford, but it's worth following -- especially since many people purchase the biggest house the bank says they can buy, without regard for their other financial goals.

Why is this Suze Orman advice so important?

Orman says most people are better off with a smaller home because a bigger home makes all your housing costs more expensive.

A pricier house means a larger mortgage payment, but as Orman points out, the added mortgage cost is not the only additional expense you'll face. Larger homes also typically come with:

• Higher property taxes
• Higher home insurance costs
• Higher utility costs
• More rooms to furnish, adding to your upfront expenses

Many of these expenses persist even after you've paid off your home loan, so they affect your finances the entire time you live in the home. Unfortunately, committing to larger monthly costs can compromise your ability to fulfill other goals, since so much of your money is tied up in housing expenses.

To avoid a situation where your house turns into a money pit and makes saving for retirement or other purchases difficult, Orman suggests spending "the least amount to fill your needs." If you decide not to splurge on a bigger property, even if it may seem more attractive in the short-term, your housing will take up a smaller portion of your budget. Orman says that will likely leave you with hundreds of extra dollars each month for other financial goals.

Focus on your budget, not the bank's

If you want to follow Orman's advice, consider deciding how much you are comfortable spending before you go to the bank for pre-approval. Many lenders will give you the largest loan they think you can repay because their profits are more important to them than your ability to do other things with your money.

If you go to the bank with a clear idea of what's affordable for you, you're less likely to buy the largest house you can borrow for.