Owning a home is not for everyone

The typical “American Dream” is owning your own home, however, if you’re not able to swing it financially, it could end up being your worst nightmare. Some questions, you might want to ask yourself :

  • How much are you gonna save up for a down payment and closing costs?
  • How do you know how high a mortgage you will qualify for?
  • How much can you really afford based on your lifestyle?
  • How much will you really save in taxes?

The key point here is home ownership is not for everyone and there is nothing wrong with that. If your lifestyle requires you to change jobs often and move or get transferred every year or so then it makes perfect sense not to buy. Typically, it takes 4-6 years to recoup the money you pay in up-front costs and the cost and fees.

You may also be happier renting if you’re not comfortable with performing your own repairs and maintenance and you can’t afford to hire someone else to do it for you. There are plenty of people who enjoys the benefits from living in apartments, benefits such as like swimming pools, recreational features and the flexibility of being able to move without too much trouble. You want to think about whats important to you, there is nothing wrong with renting if it suits your lifestyle.

For those who do want to own a home, you want to make sure to avoid being house poor. You don’t want to put your self in a situation where you have such high house payments that your a prisoner to your own house and cant afford much of anything else. You may think at first that buying your dream house is worth the sacrifice but years of doing without the enjoyment of vacations, new furniture, new cars, eating out and just other simple life pleasures can make your dream house into your worst nightmare. Becoming house poor can also affect your relationship with your spouse or partner.

The general rule of thumb you want to stick to is to buy a house that costs less than two and a half times your income. For example, if you and your spouse make $100,000 together, then you want to try to keep your home price under $250,000.

Leave a comment ?


  1. I think its a shame that a lot of people can’t afford a house now. When my father bought his first house it didn’t even cost a year’s wages.

  2. I built my first home for $23,000.00. That was in 1977. Living space was about 1500 square feet on the first floor. That was not that long ago. I was just looking at a small cabin on a lake in northern Wisconsin. The cabin was 800 square feet and was appraised in February for $230,000.00. Of course lake shore is pretty pricey right now.

  3. The rule of thumb as discussed in the well written article above is that that your can afford a home up to two and half times your annual income. This was the case for many years, but as in South Florida and many places across the country, this may be to overbearing for many families.

    With the rising price of gas and the uncertainty in the economy, it’s a very difficult time to purchase a home. Down here in South Florida that taxes alone on a $250,000 home is over $5000 a year! Then tack on a $200 a month insurance policy and some PMI and you could be paying 2,400 a month just for the mortgage. Be careful out there right now as you many get approved for a loan for more than you would ever want to make payments on. Being cash poor, as discussed in the article above, is no way to live life.

  4. I will probably wait to buy a home until I’m getting ready to start a family and know that I have a good, steady job.

    Renting serves me just fine for right now.

  5. Actually I read an article the other day that said that due to the slow down in the global real estate market, many properties are now actually cheaper to rent than pay a mortgage on. Add to that the fact that many banks and investment companies think we have another 2 years or so until we hit the bottom of the market, renting right now might be the smart thing to do…

  6. I wish that I could afford to buy a home right now … I don’t like paying rent and having that money go into some else’s pocket, never to be seen again. But all the mortgage quotes I’ve been getting are just crazy. I suppose I will just have to keep renting until things change in the market.

  7. Real estate market is ruined due to the greediness of everybody involved. It will take years to fix, not that it will ever be what it used to be.

  8. Something else that much be considered is property taxes and what the property tax history is for an area. The property taxes in some areas can be a big burden.

  9. I am also a moving mom and I also want to have one my own home where I can rest when I touch the old age. But thanks to you for disclosing such facts and now I will think about it after few years when I will have enough money and to stay at one place only.

    Till than rented is fine with me :)

  10. I bought my first home in 2000 for £37,000 and got a great deal. When I came to sell it three years later the market had really changed – the couple who bought it paid 3 times that on an 80% mortgage, which is horrendous when you think about it.

  11. Well whole credit goes to the Bush government and loosing trillion in Iraq and Afghanistan war.

    Fulfilling of dream is separate issue … I am afraid if I will loose my owned house.

  12. I’ve recently spotted an online survey in the UK and rather alarmingly 77% of people think that mortgage borrowing should NOT be capped to loans based on 3 times salary. I agree with the 23% who think that mortgage borrowing should be capped. This is how most of the credit crunch began – people borrowing more and eventually having less or no money to pay for food and bills.

  13. In a lot of other countries home ownership isn’t considered to be the norm or what should be aimed for.

    In a lot of european countries the majority of people live in rented accomodation.

  14. Renting is probably alot of peoples best bet at the moment. Even though my wife and I have secure jobs it will take 5+ years before i even consider buying a home.

  15. Renting apartments is safer than owning homes if you always change jobs. I certainly concur that it’s not really vital to own homes at times.

  16. hey, great blog. you put’s up a nice title .in today’s life it is very hard to buy a home.but some people like me have a home in advance.thanks for sharing the blog.

  17. It is better to have a budget plan before purchasing any home. I suggest to estimate the monthly repayment of the housing loan should not over 25% of total income and make sure it is still positive cash flow after deduct all expenses including housing loan. It is better to have 10% -20% savings monthly and then only allocate balances for other expenses including home loan.

  18. It depends on the area in which you live in. Victoria BC may be a very expensive place to live, however there are homes on the outskirts like in Sooke that you can buy for very cheap. They are alsod very high quality homes.

  19. When I hear things like this – from Mark: “I built my first home for $23,000.00″ it really makes me wonder what things will be like for my kids. As someone in my late 20s I find a lot of my friend’s either wont ever get a home or they are struggling to pay for the thing. The idea of a $23,000 would make most of us salivate.

  20. I have created an estimate for my dream-home which was quite reasonable for a person belonging to middle class like me.But when the construction has progressed, the cost became higher than the expected estimate.I will take care of these matters and complete the construction.

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