{"id":739,"date":"2010-06-14T08:43:16","date_gmt":"2010-06-14T13:43:16","guid":{"rendered":"http:\/\/www.mdmproofing.com\/iym\/weblog\/?p=739"},"modified":"2010-06-19T10:43:35","modified_gmt":"2010-06-19T15:43:35","slug":"not-ready-to-buy-home","status":"publish","type":"post","link":"https:\/\/www.mdmproofing.com\/iym\/weblog\/2010\/06\/not-ready-to-buy-home\/","title":{"rendered":"Ready to Buy a Home? No, You’re Not"},"content":{"rendered":"

So I recently read this great article by Trent at The Simple Dollar<\/i>…<\/p>\n

Simple Dollar: Four Atypical Things to Do Before Buying a House<\/a><\/span><\/p>\n

…and it made me think about all the things I hear people around me say — people who are either house-shopping, or who recently bought their first home — that sort of pointed toward a, uh, less-than-dreamy home-ownership experience for them.<\/p>\n

Ah yes. I can hear them all now …<\/p>\n

“We can afford it. The house payment is barely more than our rent.”<\/h3>\n

Think your current rent payments are equivalent to the monthly payment of a mortgage? If so, think again.<\/p>\n

This is because the costs of owning a home aren’t limited to your mortgage payment.<\/i> Leaking roofs, lawn maintenance, broken windows, higher utility bills, plumbing<\/a> woes<\/a>, crapped-out central<\/a> A\/C systems<\/a>, and an endless array of other “You’re on the hook now!” money drainers are always on the playbill for Joe and Jane Homeowner. <\/p>\n

And many times, the prices of such “homeowner incidentals” easily reach into the four-digit realm to fix. <\/p>\n

Because such expenses are essentially guaranteed<\/b> when you’re a homeowner, and because they’d never be a consideration if you were a renter, it is downright deadly<\/b> to equate rent payments and mortgage payments.<\/p>\n

Yet, like car buyers, potential homebuyers (especially young adults) tend to see everything in terms of monthly payments<\/b> rather than total cost<\/b>. “Payments” are simple, and hide a whole lot of things. There’s a reason the lending world wants you to focus on payments. <\/p>\n

“Cost,” however, is expansive. It includes all items stated, incidental, and accrued. <\/p>\n

Ignoring “cost” because it tells you something you don’t want to hear, in favor of “payment,” because it’s nice and cozy and your banker tells you you can afford it? <\/p>\n

That’s a fantastic way to end up broke and on stage with Dr. Phil.<\/p>\n

“What if we don’t have any money for a down payment?”<\/h3>\n

Then you shouldn’t be buying a house. <\/p>\n

Anyone who tells you otherwise (1) is doing you a major disservice, and (2) probably has a paycheck that’s dependent on your buying decision. <\/p>\n

If you can’t come up with at least 3.5 percent down (the bare-assed minimum to qualify for an FHA loan<\/a> these days), then you’ve made one thing perfectly clear: You have no control over your spending or your money. You haven’t shown any<\/b> ability to plan for the future and the unknowns it will send your way.<\/p>\n

Having no savings for a down payment shows that you have no respect for risk<\/b><\/a>. (Or no financial ability to acknowledge it. Either way, you’re not qualified for home ownership.)<\/p>\n

Remember the four-digit “unexpected” expenses I mentioned above? They’ll happen. They’ll happen at the worst possible times. They’ll have to be paid for.<\/p>\n

“It’s time to buy. Our agent says prices have bottomed.”<\/h3>\n

The day potential homebuyers stop thinking of houses as a can’t-miss investment, just waiting to be snapped up at the bottom tick, is a day I’ll cherish. Until homes become a place to live again, rather than a no-risk-perceived lotto ticket to retirement cash, then the housing market will continue to deliver misery to a great many people. <\/p>\n

“It’s time to buy. My wife and I really need a tax break.”<\/h3>\n

Ah yes, the old tax-deductibility hook<\/a>, adored by real-estate agents and mortgage brokers alike.<\/p>\n

I’m pretty good with Excel, but somehow I still can’t make it show me how this is a path to riches: Send $100 to the bank (interest) so you don’t have to send $30 to the IRS (taxes).<\/i><\/p>\n

Maybe there’s a function I’m missing somewhere. Yeah, that’s probably it.<\/p>\n

“Yes, the payment seems high. But our agent said we would grow into it.”<\/h3>\n

Back when Lisa and I were buying our home (our first, and still current, home), I had several people tell me not to be afraid of “stretching” to get into a “starter” home. My memory’s foggy, but I bet I heard it from our real-estate agent, too. Tough to recall.<\/p>\n

However, even at the tender age of 25, Lisa and I understood one thing: Just because the bank was willing to loan us $110k, that had no<\/b> bearing on whether we could afford — or should even consider purchasing — a $110k house. In fact, we ended up purchasing a ~$65k house. <\/p>\n

Assuming we stay here, this house will be paid off by the time our kid hits high school.<\/p>\n

In Summary: Trent Nailed It<\/h3>\n

Here’s the point where, for my money, Trent’s message is absolutely spot-on. He runs through a handful of reasons people give for why it will be “different” (always in a good way) once they buy a house:<\/p>\n

\n

\u201cOur lifestyle will be different when we own a house.\u201d In what way? The only major change will be that you have less spending money and, most likely, more room to store stuff.<\/p>\n

Such statements are merely ways to pass the buck on to your future self, the responsible one who owns a house and makes more money and makes all of the payments. If that person doesn\u2019t exist now, merely owning a house won\u2019t make that person exist in the future. Don\u2019t ever base your plans on what you hope might happen someday.<\/p>\n

Take responsiblity now. See whether or not you actually can make it work in terms of your month-over-month finances. If you can\u2019t do it now, then you won\u2019t be able to do it then.<\/p><\/div>\n

I could not agree more strongly. If you can’t do it now, you won’t be able to do it then.<\/i><\/p>\n

If you couldn’t save money while you were renting, you won’t save money once you’re a homeowner. There will simply be too many opportunities<\/b> for money to drift out of your grasp. Having no ability to save before<\/b> you make the leap to home ownership, even if it’s just a few percent of the purchase price, means you’ll be placing yourself in a terribly perilous position.<\/p>\n

Betting that you can handle it all because of a better future “financial self” is precisely what you must not<\/b> do. Because it’s quite likely that the total cost<\/b> of home ownership itself is what will consistently drag your financial future lower.<\/p>\n","protected":false},"excerpt":{"rendered":"

So I recently read this great article by Trent at The Simple Dollar… Simple Dollar: Four Atypical Things to Do Before Buying a House …and it made me think about all the things I hear people around me say — people who are either house-shopping, or who recently bought their first home — that sort […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[31,32],"tags":[],"class_list":["post-739","post","type-post","status-publish","format-standard","hentry","category-homeownership","category-mortgages"],"yoast_head":"\nReady to Buy a Home? No, You're Not<\/title>\n<meta name=\"description\" content=\"It's pretty easy to tell who's ready for home ownership, and who's not. Just listen to what people say.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.mdmproofing.com\/iym\/weblog\/2010\/06\/not-ready-to-buy-home\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Ready to Buy a Home? No, You're Not\" \/>\n<meta property=\"og:description\" content=\"It's pretty easy to tell who's ready for home ownership, and who's not. Just listen to what people say.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.mdmproofing.com\/iym\/weblog\/2010\/06\/not-ready-to-buy-home\/\" \/>\n<meta property=\"og:site_name\" content=\"Money Musings\" \/>\n<meta property=\"article:published_time\" content=\"2010-06-14T13:43:16+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2010-06-19T15:43:35+00:00\" \/>\n<meta name=\"author\" content=\"Michael\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Michael\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.mdmproofing.com\/iym\/weblog\/2010\/06\/not-ready-to-buy-home\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.mdmproofing.com\/iym\/weblog\/2010\/06\/not-ready-to-buy-home\/\"},\"author\":{\"name\":\"Michael\",\"@id\":\"https:\/\/www.mdmproofing.com\/iym\/weblog\/#\/schema\/person\/9d5b5e0cd8c50c2ff0f4a1df112a5a42\"},\"headline\":\"Ready to Buy a Home? No, You’re Not\",\"datePublished\":\"2010-06-14T13:43:16+00:00\",\"dateModified\":\"2010-06-19T15:43:35+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.mdmproofing.com\/iym\/weblog\/2010\/06\/not-ready-to-buy-home\/\"},\"wordCount\":1079,\"commentCount\":7,\"articleSection\":[\"Homeownership\",\"Mortgages\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.mdmproofing.com\/iym\/weblog\/2010\/06\/not-ready-to-buy-home\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.mdmproofing.com\/iym\/weblog\/2010\/06\/not-ready-to-buy-home\/\",\"url\":\"https:\/\/www.mdmproofing.com\/iym\/weblog\/2010\/06\/not-ready-to-buy-home\/\",\"name\":\"Ready to Buy a Home? No, You're Not\",\"isPartOf\":{\"@id\":\"https:\/\/www.mdmproofing.com\/iym\/weblog\/#website\"},\"datePublished\":\"2010-06-14T13:43:16+00:00\",\"dateModified\":\"2010-06-19T15:43:35+00:00\",\"author\":{\"@id\":\"https:\/\/www.mdmproofing.com\/iym\/weblog\/#\/schema\/person\/9d5b5e0cd8c50c2ff0f4a1df112a5a42\"},\"description\":\"It's pretty easy to tell who's ready for home ownership, and who's not. Just listen to what people say.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.mdmproofing.com\/iym\/weblog\/2010\/06\/not-ready-to-buy-home\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.mdmproofing.com\/iym\/weblog\/2010\/06\/not-ready-to-buy-home\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.mdmproofing.com\/iym\/weblog\/2010\/06\/not-ready-to-buy-home\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.mdmproofing.com\/iym\/weblog\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Ready to Buy a Home? No, You’re Not\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.mdmproofing.com\/iym\/weblog\/#website\",\"url\":\"https:\/\/www.mdmproofing.com\/iym\/weblog\/\",\"name\":\"Money Musings\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.mdmproofing.com\/iym\/weblog\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.mdmproofing.com\/iym\/weblog\/#\/schema\/person\/9d5b5e0cd8c50c2ff0f4a1df112a5a42\",\"name\":\"Michael\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/secure.gravatar.com\/avatar\/2ed3cc00ccbe418a46908aff759f0164eaa603a5944928ead8ba144229b89d7c?s=96&d=http%3A%2F%2Fwww.mdmproofing.com%2Fiym%2Fweblog%2Fwp-content%2Fthemes%2Fmusings%2Fimages%2Fuser.gif&r=g\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/2ed3cc00ccbe418a46908aff759f0164eaa603a5944928ead8ba144229b89d7c?s=96&d=http%3A%2F%2Fwww.mdmproofing.com%2Fiym%2Fweblog%2Fwp-content%2Fthemes%2Fmusings%2Fimages%2Fuser.gif&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/2ed3cc00ccbe418a46908aff759f0164eaa603a5944928ead8ba144229b89d7c?s=96&d=http%3A%2F%2Fwww.mdmproofing.com%2Fiym%2Fweblog%2Fwp-content%2Fthemes%2Fmusings%2Fimages%2Fuser.gif&r=g\",\"caption\":\"Michael\"},\"sameAs\":[\"http:\/\/www.mdmproofing.com\/iym\/\"],\"url\":\"https:\/\/www.mdmproofing.com\/iym\/weblog\/author\/Michael\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Ready to Buy a Home? No, You're Not","description":"It's pretty easy to tell who's ready for home ownership, and who's not. Just listen to what people say.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.mdmproofing.com\/iym\/weblog\/2010\/06\/not-ready-to-buy-home\/","og_locale":"en_US","og_type":"article","og_title":"Ready to Buy a Home? No, You're Not","og_description":"It's pretty easy to tell who's ready for home ownership, and who's not. Just listen to what people say.","og_url":"https:\/\/www.mdmproofing.com\/iym\/weblog\/2010\/06\/not-ready-to-buy-home\/","og_site_name":"Money Musings","article_published_time":"2010-06-14T13:43:16+00:00","article_modified_time":"2010-06-19T15:43:35+00:00","author":"Michael","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Michael","Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.mdmproofing.com\/iym\/weblog\/2010\/06\/not-ready-to-buy-home\/#article","isPartOf":{"@id":"https:\/\/www.mdmproofing.com\/iym\/weblog\/2010\/06\/not-ready-to-buy-home\/"},"author":{"name":"Michael","@id":"https:\/\/www.mdmproofing.com\/iym\/weblog\/#\/schema\/person\/9d5b5e0cd8c50c2ff0f4a1df112a5a42"},"headline":"Ready to Buy a Home? No, You’re Not","datePublished":"2010-06-14T13:43:16+00:00","dateModified":"2010-06-19T15:43:35+00:00","mainEntityOfPage":{"@id":"https:\/\/www.mdmproofing.com\/iym\/weblog\/2010\/06\/not-ready-to-buy-home\/"},"wordCount":1079,"commentCount":7,"articleSection":["Homeownership","Mortgages"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.mdmproofing.com\/iym\/weblog\/2010\/06\/not-ready-to-buy-home\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.mdmproofing.com\/iym\/weblog\/2010\/06\/not-ready-to-buy-home\/","url":"https:\/\/www.mdmproofing.com\/iym\/weblog\/2010\/06\/not-ready-to-buy-home\/","name":"Ready to Buy a Home? No, You're Not","isPartOf":{"@id":"https:\/\/www.mdmproofing.com\/iym\/weblog\/#website"},"datePublished":"2010-06-14T13:43:16+00:00","dateModified":"2010-06-19T15:43:35+00:00","author":{"@id":"https:\/\/www.mdmproofing.com\/iym\/weblog\/#\/schema\/person\/9d5b5e0cd8c50c2ff0f4a1df112a5a42"},"description":"It's pretty easy to tell who's ready for home ownership, and who's not. Just listen to what people say.","breadcrumb":{"@id":"https:\/\/www.mdmproofing.com\/iym\/weblog\/2010\/06\/not-ready-to-buy-home\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.mdmproofing.com\/iym\/weblog\/2010\/06\/not-ready-to-buy-home\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.mdmproofing.com\/iym\/weblog\/2010\/06\/not-ready-to-buy-home\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.mdmproofing.com\/iym\/weblog\/"},{"@type":"ListItem","position":2,"name":"Ready to Buy a Home? No, You’re Not"}]},{"@type":"WebSite","@id":"https:\/\/www.mdmproofing.com\/iym\/weblog\/#website","url":"https:\/\/www.mdmproofing.com\/iym\/weblog\/","name":"Money Musings","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.mdmproofing.com\/iym\/weblog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.mdmproofing.com\/iym\/weblog\/#\/schema\/person\/9d5b5e0cd8c50c2ff0f4a1df112a5a42","name":"Michael","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/2ed3cc00ccbe418a46908aff759f0164eaa603a5944928ead8ba144229b89d7c?s=96&d=http%3A%2F%2Fwww.mdmproofing.com%2Fiym%2Fweblog%2Fwp-content%2Fthemes%2Fmusings%2Fimages%2Fuser.gif&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/2ed3cc00ccbe418a46908aff759f0164eaa603a5944928ead8ba144229b89d7c?s=96&d=http%3A%2F%2Fwww.mdmproofing.com%2Fiym%2Fweblog%2Fwp-content%2Fthemes%2Fmusings%2Fimages%2Fuser.gif&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/2ed3cc00ccbe418a46908aff759f0164eaa603a5944928ead8ba144229b89d7c?s=96&d=http%3A%2F%2Fwww.mdmproofing.com%2Fiym%2Fweblog%2Fwp-content%2Fthemes%2Fmusings%2Fimages%2Fuser.gif&r=g","caption":"Michael"},"sameAs":["http:\/\/www.mdmproofing.com\/iym\/"],"url":"https:\/\/www.mdmproofing.com\/iym\/weblog\/author\/Michael\/"}]}},"_links":{"self":[{"href":"https:\/\/www.mdmproofing.com\/iym\/weblog\/wp-json\/wp\/v2\/posts\/739","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.mdmproofing.com\/iym\/weblog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.mdmproofing.com\/iym\/weblog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.mdmproofing.com\/iym\/weblog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.mdmproofing.com\/iym\/weblog\/wp-json\/wp\/v2\/comments?post=739"}],"version-history":[{"count":38,"href":"https:\/\/www.mdmproofing.com\/iym\/weblog\/wp-json\/wp\/v2\/posts\/739\/revisions"}],"predecessor-version":[{"id":791,"href":"https:\/\/www.mdmproofing.com\/iym\/weblog\/wp-json\/wp\/v2\/posts\/739\/revisions\/791"}],"wp:attachment":[{"href":"https:\/\/www.mdmproofing.com\/iym\/weblog\/wp-json\/wp\/v2\/media?parent=739"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.mdmproofing.com\/iym\/weblog\/wp-json\/wp\/v2\/categories?post=739"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.mdmproofing.com\/iym\/weblog\/wp-json\/wp\/v2\/tags?post=739"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}