I’ve talked about this before but it bears repeating. A house is not an asset. An asset is what puts money in your pocket. Is your house putting cash in your pocket? You are paying taxes, utilities, insurance, ect, all negative cash flow.
Real estate agents will tell you that a home will appreciate in value. Maybe over a LONG period of time. The recent real estate bust should tell us something.
Most first time home buyers overbuy. The qualify for a small or no down payment ( which they think is a good idea), but they don’t realize that they are actually financing more which means a higher monthly payment and more interest paid in.
They say that your mortgage should not be more than 28% of your monthly income. As an example, if you make $45,000/yr. your monthly mortgage payments should be no more than $1,050/mo.
Get real, who can afford a $1,050/mo. mortgage payment while only making $45,000/yr? When you factor in income taxes, credit card payments, and all other expenses-such as food, no way they can maintain that payment.
There is no room for error. You don’t eat out, you don’t buy anything else, and you hope you do not lose your job. Take about stress! The American dream can quickly turn into the American nightmare.
My next blog will discuss the sensible way to buy a home.
Jacques
CreatingWealthThatLasts
1 comment:
Jacques, You are so right. That is why we as a country are in this mess and why people are still in trouble now.
Dan and Deanna "Marketing Unscrambled"
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