Rents are on the rise. Homeownership offers tons of great benefits. However, you don't want to be saddled with a huge financial burden that doesn't allow you to also enjoy life outside those four walls. Have you ever heard of the term "house poor"? Find out what steps you need to take before you own a house so that it doesn't end up owning you.
How to Own a House and Live Your Life at the Same Time
Pump Up Your Downpayment
Yes. Several programs allow you to put little to no money down on a home purchase. Nonetheless, experts suggest buyers put down no less than 20% of the purchase price. This cuts out the need to pay PMI (private mortgage insurance). Also, since you finance less, you pay less each month for your mortgage payments. Lower expenses allow you to own a house and still travel, shop, play in the desert or spend all day out on your boat without stressing about your budget.
Get That Emergency Fund Together
Being a homeowner means that you are ultimately responsible for any mishaps or emergencies that arise. Coming up with a few hundred or even thousands of dollars to fix a water leak or electrical issue might prove problematic last minute. But, an emergency repair fund alleviates the stress because you already have that money on hand. "Life emergencies" (death in the family, job loss, serious injury or health problem) also hit from out of nowhere. The last thing you need to worry about is losing your Havasu home. Build up your emergency fund to cover between three to six months of living expenses just in case. That means three to six months of mortgage payments, car and homeowners' insurance, utilities, groceries, car payments, student loans, credit card payments, etc. Then, you can own a house and still live your life.
Sure, that may sound simple. But for many homeowners, it's a tough pill to swallow. Just because a mortgage company approves you for a certain amount doesn't mean you have to spend that much on your Havasu home. Keep your housing expenses to under 30% of your total income. The lower, the better. Decide how much you can spend on your mortgage while still maintaining a lifestyle you enjoy. That way, you own a house. The house doesn't own you.