Monday, April 13, 2009

Homeownership...The American Dream? Not so fast...

A few weeks ago someone sent me an email advertising a mortgage for low income people available through the funds from the new stimulus package. The email stated that you only had to have an annual income of around $24,000 to qualify to buy your very own home!


Yes, only to wish you hadn't!! Why are we pushing low income people to buy a home? Even people with high incomes who also have high amounts of debt and poor spending habits should steer clear of home ownership.


It seems as if we haven't learned anything from the mortgage and economic meltdown. Because if we had we would be saying 'Hey, there's more to home ownership than simply paying the monthly note'.


Things like maintenance, repairs, taxes, and insurance. Not to mention your housing costs, whether it is rent/or mortgage, should not exceed 28 - 35% of your 'take home' pay. Some calculate gross pay, that's not realistic and 35% is on the high side, you still need to be able to save for life's incidentals...


I say rent, I don't care if it's you and 6 kids, cram into an apartment you can afford until your income goes up and you can buy a home on solid footing. Being uncomfortable is a lot better than being MISERABLE because you've bought a home you are struggling to pay the monthly expenses for! Ask the folks on either end of the income spectrum. We've all seen that regardless of how much money you make, if you over-extend yourself, you're still BROKE at the end of the day.


So don't let the ad campaigns get you again people. Do the math and make sure that home ownership fits in your budget - with room still left for saving. Make sure you can devote the TIME to caring for a house and don't be so caught up on 'owning a home'. As we can all see, the 'American Dream' has been uprooted....Create your own dream... hopefully it will include educating yourself and your family on effective money management as well as debt free living! - Dorethia



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