Dream Home

Don't let the dream turn into a nightmare! When looking on buying a house we look for the house of our dreams. We imagine a place to call our own, inviting guests over for dinner and parties and eventually raising a family there. But how can we be sure that the dream doesn't end up in a nightmare of being put out on the street with a foreclosure because we bought too much house? This has recently happened to so many people and some have credited it to the recent recessions we have been having. How can we guarantee this doesn't happen to us?

First off we want to be completely debt free and have an emergency fund of 3-6 months of expenses, then we will be ready to buy. Now, the best way to buy a house is the 100% down plan. Just buy the house outright... this way you are not a slave to the bank and don't have to worry about the monthly payments. Now although this would be really cool, it is not realistic for everyone. So the next best option would be to take out no more then a 15-year fixed rate mortgage after a minimum 20% down payment (with this down payment the mortgage company won't force you to pay for private mortgage insurance which is about $75 a month per $100,000 borrowed). The payments for the mortgage should be no more than 25% of your monthly take home pay. Any more expensive will increase the financial stress and the chance of failure if an emergency arises. I don't own a house yet but I guarantee you this is what I will do.

If your worried that the key to wealth is a nice expensive house then think about this. In Stop Acting Rich, Thomas Stanley states that there are nearly three times more millionaire households in homes valued at less than $300,000 [1,138,000] than there are in homes valued at $1M or more [403,211]. To be a real millionaire we need to act like one, not look like one.

--A Future Millionaire