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The #1 reason why you should buy a house or condo

real estate retirement saving

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 Buying a house or condo is the easiest way to accumulate wealth

The number one reason to buy a house or condo is that you are going to get old. Whatever age you are now, hopefully you'll be around a long time and you are going to be old. Housing costs are always going to increase and your rent is always going to increase. If you purchase a home you can get a fixed rate mortgage and your house payment will always be the same for 15, 20 or 30 years. So when you buy a home and you take out that mortgage and you make those payments every month you're putting money towards the equity in your house. You owe less and as your home increases in value over time you have more wealth based on your home’s value. And hopefully it will be paid off when you are at retirement age! 

You need to plan for supporting yourself in retirement years.

Do you want to retire and also have to manage a $4000 rent payment? Worry you might get displaced and have to move?  Would you like to have to move when you are 70 years old? How about worrying about covering food and health care costs? If you don’t own a home by then, you’ll also need to manage rent and unstable housing. Think about those scenarios.

Renting gives you no control

Another reason to own your own home is if you rent, your rent is always going to go up for the rest of your life! Got a new raise.. Oh well your rent is going up anyhow. Also you have no control. You might be in a lease and it might be a year lease, but at anytime the owner of that property could sell the house, kick you out, raise your rent, change the rules, get crappy neighbors, and stop taking care of the place. There are so many things out of your control if you rent. Those are things that matter to your quality of life. You work hard for your money. You want to be comfortable. You want to enjoy your space. You deserve that. You want to be able to do what you want when you want. But when you're renting an apartment you're so limited. You can't make changes to your environment. You can't just paint the walls whenever you feel like it, you can’t to start adding shelves or fixtures because your landlord will get upset and could evict you. Well..it's not your property. I know this because I was a landlord for 10 years. 

Let's say you buy a house today for $400,000 and you get a fixed rate mortgage and let's say that mortgage payment is $2,200 a month for 30 years, that's it!! You're always going to have that same payment. (That is an estimate with $20,000 down including home insurance and taxes). If the market interest rate changes for the better, you can refinance and you might save even more money someday. If you're in that house for 20 to 30 years, the value of the house is probably going to triple. Now that's only really helpful if you're going to sell your house so don't plan on that if you buy a home. Plan on it being the place we're going to live for a long time. Unless.. you decide to upgrade or downgrade that's a whole other conversation.

When buying a house or condo you need a huge downpayment!

The hardest part about buying a home is coming up with the down payment. I know this so well. It was the hardest thing I did in my life. I don't care where you live in the United States, whatever your housing costs are relative to your income, it's the hardest thing to save for. You have to come up with 20% of the price of that house. So if it's $400,000 you have to come up with $80,000!!  I mean come on. Who has $80,000 ready to go unless it is a gift.  So you have to put 5% or 3% down.  There are lots of programs out there. Especially if you are a veteran. Check out all the options. So, let’s say you have saved 5%, $20,000. You also need closing costs, $5000, and some extra savings to cover emergencies (that bank wants to see that), $5000. $30,000 you’ll need.  That is a lot!

Be prepared for PMI

Do not forget PMI, Private Mortgage Insurance. Huh? If you put less than 20% down you have to pay insurance so that the bank can cover themselves if you default. That might be $300 - $600 on top of your monthly payment. It sucks. But just accept it. Know that someday it will go away. When you have enough paid off on the loan, or maybe the home value has increased enough, you can ask the lender to drop the requirement.  Here is a great example, where someone did that on Dinks Finance. In my case, after 5 years, there were better interest rates, I was able to refinance and also drop PMI.

When buying a house or condo you need be prepared

Now in addition to coming up with the down payment you also have to be prepared for new responsibilities.  A large monthly payment, extra bills, repairs, property management, researching loans, monitoring your money better, and planning ahead. You need to start Actively Managing your money. You will sort of be forced into it, and it can be stressful. But if you are kind to yourself you can learn some ways to make life easier and less stressful while continuing to save more money and build wealth with your home.  I can help you with a fantastic course to give you those tools! Next Level Money Management.