Blather

It’s March. Spring is here in most places. And this is when the house hunting season starts to get rolling. I used to moonlight as a realtor. I started from nothing, ran my own little gig, and did very well. Then I got a book contract, and there was no way I could do three jobs. But I learned a lot.

One of the things I learned is that home buyers very frequently have a very hard time staying within their budget.

They set a number, start looking in their price range, then peek at the homes in a higher price range, and of course those homes look better. Why wouldn’t they? They’re more expensive! And, geez, they have such nice faucets and cool counters and a shower with five heads so you can wash your body from every imaginable angle, and suddenly many of my buyers would refuse to see cheaper homes. Because they just had to have the ultrawash shower.

Or a dent in a wall that’s officially called an alcove.

Or a super deluxe gas heater fireplace that runs on banana peelings and saves gerbils.

Or whatever.

It’s called house craze. It’s a temporary thing. It passes as soon as you get in the house and start making the payments.

And then you wake up and realize you have a hot tub and you hate hot tubs! What in the world were you thinking?!

Well, you had house craze.

The unfortunate side effect of buying too much house is that the mortgage eats up so much of the take-home pay that it makes everything else exceedingly tight. Or impossible.

You don’t have room to pay off debts. Don’t have room to invest much, or at all. Don’t have room to have fun vacations. Don’t have room for anything except the fricken-ricken, blankity-blank, #$%!* house!

This condition is called being house poor.

So house craze leads to being house poor.

Which leads to second jobs and stress and often more debt. You may also end up in a roadside ditch. The situation below occurs with more than just with cable companies.

The lender will tell you that you can lend up to 36% of your take-home pay!

Your eyes go wide, and you being to think that maybe you can afford two ultrawash showers. But just slow down and think for a second–the lender is the one SELLING you the loan.

Right…

Don’t listen to the lenders.

Listen to common sense.

My advice is the same as Dave Ramsey’s:

1. Don’t buy a house until you’re out of debt and have saved enough to pay 10% of the purchase price of the house.
2. When you’re at that point, get a 15-year, fixed-rate mortgage with a monthly payment that’s no more than 25% of your take-home pay.

So that’s my advice. You’re free to do with it what you wish. Just know that being house poor sucks.

And all that to introduce the calculator which will tell you exactly how much home you can afford. It takes 10 seconds to fill in.

Here it is: How much home can I afford?

Download it and be happy.

Readers, for the last year or so I’ve set the blog to show a summary of each post which you then click into as shown below.

For the years before that I just showed the full text like you see now.

I personally engage more with full text displays because I read as I scroll, so even if I’m skipping, I do at least pick up the gist of the post.

Do you have a preference? Does one view “feel easier” to you?

Let me know.