You often hear that owning a home is important for building wealth and surviving inflationary times. While that may be true, there are other important factors to consider regarding whether you can actually afford to buy a house.
Topics Discussed:
Buying more house than you can afford
Who is looking out for you in the home buying process?
Thinking through the consequences
You can watch this video and others on the Voice Wealth Management YouTube channel.
Transcript:
Hi, I'm Russell Rivera, founder and president of voice wealth management. Welcome back to our guest was one of our more recent blogs that wanted to talk about buying a home and how important it was for building wealth and how it's really going to help people in inflationary times, like we're in right now.
But what I wanted to say also is, obviously, this is to some the largest decision of their lives and not a decision to be taken lightly. I've run into many people who have gone on and said, this is a priority for me, this is the number one thing I want to do. That's terrific. That's great. That's – right, like, that's awesome.
The kicker is, we've had so many people who have gotten ahead of themselves and tried to buy more house than they could afford it their budget, and think they can. And at this point in time, I'm sitting there and going, well, that's great, but have you talked to a financial planner, and figured out whether or not it's something you can do? And who is the person, when you're going through the home buying process, that's going to tell you that that's something they should do?
The mortgage lender just wants to make the loan and make sure that it can do so.
The real estate broker is going to do what they can do to make sure that you are minimally qualified for the amount of property that you want to buy, and you can buy, right? As long as you'll meet back standards, they're perfectly happy to sell you the property, because again, the more money you pay for it that much more commission they make.
So who's looking out for you in the process? The answer is you should be talking to someone who can help you understand how this will fit in with your budget and lifestyle.
You know, there are a lot of programs out there that allow people to buy a home less than 10% down. You know, that's terrific as well. But the kicker is there additional costs coming to do that, like private mortgage insurance or PMI. And just trying to make sure that it meets your budget is a challenge. So you've got to make sure that it will meet your lifestyle, or that you'll be able to manage any unexpected changes that happened in your life. Like maybe you buy a house and lose a job. I almost did that.
Back in 2007, we were very close to buying a house. We thought we could afford it. But we recognize there might be a problem with my job. We didn't buy it. And two weeks later, I lost my job. So these things are important. And you have to think about them and go through that with them. Go through them with somebody who's specifically focused on you and your situation, and making sure that you can handle the things that come your way.
So with that, if you're thinking of buying a house, as a young person, please talk to a planner first. It will help you.
So with that, thank you very much. I'm Russell Rivera, founder and president of Voice wealth management. And we'll see you next time
Russell D. Rivera, CFA, CFP® is the Founder and President of Voice Wealth Management (Voice) in New York, NY. He also likes to think of himself as a Personal CFO and Financial “Therapist” for entrepreneurs, young professionals, and their families. He helps clients make prudent financial decisions regarding spending, saving, investing, and planning while giving a voice to the individual client's financial priorities and experiences.