My initial business interest was real estate (and to a large part still is and always will be!) so I read every real estate investing book I could get my hands on. I went to the seminars and I bought the correspondence courses (before online courses were a thing).
Eventually, I decided that I wanted to also become a real estate agent. My thoughts were that in addition to helping people buy and sell homes that I would have all kinds of investing opportunities, contacts, and information too.
Back in those days, the MLS (home listings with all the details) were issued to agents in big books that looked somewhat like yellow pages – for those old enough to know what those were. For everybody else -think big ass book – and you get the idea.
So, the tools that you and I and anyone else who wants access to that are readily available for us all did not exist back then, the only way to get full access was if you were an agent or broker.
I soon began making sales. The commissions were nice, especially since to me and my wife they were just extra money as I was still on active duty in the military and real estate was a part-time thing for me at that time.
Gradually I sold more homes, met more and more people and continued to learn all about real estate from multiple different aspects. I became very good at being able to quickly and efficiently determine an accurate market value on any property.
One thing most buyers did was to buy at or near the maximum amount they could qualify for a mortgage. That is the first mistake I want you to consider, and hopefully avoid making. Simply being able to barely afford to make the mortgage payments is not the same thing as buying a home you can actually afford.
Thanks to my real estate career I was able to meet an incredible number of people over the years and to get to hear all their stories. Both the good and the bad – and even the ugly too.
Over the years I heard one sad story after another sad story of people buying what they thought and hoped would be their dream homes, only to discover that what they really bought was their worst financial nightmare. These stories happened all the time. These stories are still repeated to this day by people who are wide-eyed and ill-informed who are making the same horrible mistakes so many before them already have.
The first thing I want you to consider is do you really NEED to buy a home right now at all, and if so what can you actually AFFORD right now?
If you are likely to get transferred or leave the area for any reason within the next year or two – then you may be better off renting or choosing some other housing option than you would be buying a home right now.
The same is true if you are thinking about getting married (or divorced). Buying a home may be an unnecessary burden that you just don’t need – not at this time anyway, and later things will be different. It’s OK to wait if you need to and if you want to.
Keep in mind that buying a bigger home will lead to other bigger expenses too.
For example, your power bill and overall heating and cooling costs will be more in a larger home than a smaller own, assuming both are decently insulated. Yard maintenance and upkeep and the equipment that will be needed will cost money – and time – or even more money to pay someone else to do it.
When you own a home if the heat pump or the water heater goes out you get to pay for having it fixed. Roof leaks, leaking toilettes and all kinds of other issues – all on you too.
Then of course, the bigger the home the more stuff you will need (WANT) to fill it with – and the bigger the expense to buy it all. If you finance any of that furniture and appliances then you are increasing your debt load. That leads to stress and all kinds of other problems over time. Think twice before you do this!
Explore Other Options
I love homes of all kinds and all sizes. I always have for some reason ever since I was a kid, and I still do just as much today. What I hate is debt. Especially consumer debt of any kind. While I am not saying that you absolutely should not use a mortgage to acquire your home (but believe it or not you can own a home without any mortgage!) you do need to be very careful not to get yourself and your family into financial trouble by taking on a huge mortgage that you can not really afford – and that you don’t need at all.
With that in mind lets take a look at a few things you could consider;
- All Cash Purchase – Believe it or not, there are homes you can buy in most areas that are only a fraction of their potential actual market value. That is because they are in BAD shape, usually neglected, vacant, and have been for years. Yet it is possible to buy such a house in some areas for as little as $5000 to $20,000 dollars in some cases. Once repaired and improved the same home is often worth well over $100,000 to $200,000 plus. Save up your money, find and buy such a property – and do most of the repairs and improvements yourself. You can learn what you need to know relatively quickly and easily to be able to do your own work. But make no mistake the work will not be easy – it will require hard work – and it will take time and learning on your part.
- Tiny House or RV – If you take a break from the rat race for a year or three – and you have a plan – then you can save up enough money to buy some land and build your own home with your own hands, or save up and take option 1 above while you live in your tiny home or RV.
- Take a Job With Housing – This obviously will NOT work for everyone (by the way nothing works for everyone – that is why you need to always choose what works for YOU) it may be an option if your personal and family situation will allow it and if you have both the guts and the desire to do it. Become a truck driver. Once you complete training te company you go to work with supplies you with a truck. The truck will have a sleeper compartment and inside is much like a small RV. It has a bunk (or two) and it has hookups for a refrigerator/cooler, a TV, and storage lockers for your stuff. You can put an inverter in it (many already have one) to run a microwave and other appliances. You work and earn money driving the truck ($1000 or more per week if you are motivated and know what you are doing and may earn $1200 or more per week if you are really motivated – keep in mind that all depends on YOU though) and you have almost NO EXPENSES. Think about that for a moment. You don’t need a mortgage or to pay rent anywhere, you don’t need a personal car or its expenses, no home utilities, and no heating and cooling bills even in your truck – everything you need – other than food and toothpaste, etc., and your cell phone expenses are paid by the company that employs you. That means you can do this for a year or two or three and save virtually all of the money you make! Then go build a paid-for home. Another option is to join the military and do the same thing – again not going to work for everyone – but if it could work for you then look into it and make a decision. Either way, there are things you can do that will pay you well and provide housing – so you can save your money. Just a little time and discipline for a year or a few can change your life forever.
What’s the Bottom Line?
Take the time and make the effort to think things through, gather information and make informed decisions. Most people don’t do that. They follow the normal path – and get as much home as they can borrow to get. That my friend is a very BAD idea!
In the end, you have to decide.
Just know that you do have other options. It is not simply a choice of paying market rent or of paying the maximum mortgage you can get. Take the time to expand your vision and look at other options and then choose something intentionally that really works for you right now.
Even then keep in mind you are not looking for THE one and only home you will ever have either. Just the right home for you and anyone you care about right NOW.
Make a better decision than most do and live a better life than they ever will too.