Home Financing Matters: Don’t Wait to Buy A Home
by Richard Swan
A client came to my office recently and indicated that she
wanted to look at buying a home in about 5 years. “Why wait so long?”, I asked. She told me that she attended a financial
workshop at her church and what they had learned was not to buy a house until
you can afford to do a 15 year loan. I
said, “Wait a minute, somebody is trying to sell you a bridge in New York.”
The main thing left out of the self-proclaimed guru
handbooks on financing is that everyone has to have a place to live. How you choose to do that will be the answer
to your financial success. With this
particular woman, she was living in an apartment and paying about $900 per
month in rent for 2 bedrooms, a kitchen, and a living room. I told her that she could have more than that
amount of room, plus a garage for less than what she was paying in rent. “How?”, she asked.
You can buy a home in Tennessee for very little money down
and in some cases with no down payment.
Rates right now are still extremely low and the difference in the cost
of a 15 year loan and a 30 year loan is very small; maybe $5,000 over the life
of the loan. In two years, you will have
spent $21,000 in rent with nothing to show for it.
In the five years she was intending to wait to buy a home,
she could have $6,000 to $9,000 in equity already built in, without the added
appreciation that most people see from their real estate investment of 2%-3%
per year. For most people who work for
someone else in a clerical, manufacturing, office, or retail position, their
home represents their biggest investment.
Many of those same individuals spend years, and thousands of dollars,
wasting money on rent.
If you are currently living rent free with family or
friends, then do that and set money aside to save for a house, but if you are
currently renting and would like to talk about buying a house then give me a
call to discuss your options.
If you have questions about financing options or credit
scores, call me at 865-742-3384.
Copyright ©2015 Richard Swan
This blog is for informational purposes and is the opinion of the writer. In financial matters always solicit professional advice and legal counsel if necessary.
