April 14, 2015

Why is a personal home a poor investment? What can you do to reduce how much you lose on this very large purchase?

5 thoughts on “April 14, 2015”

  1. Garrett Haag says:

    The personal home is a poor investment at best. This is due to all the costs that a home can occur. Such as property expense and upkeep. A home can cost you 10% of its original value a year in expenses. Especially if you are paying a high amount of interest on the loan. You should not buy more home than what you need, buy a home that will fit what you need it too, avoid moving if you can at all, stay in that home as long as you can, it costs alot to buy and sell a home, a starter home should be avoided for the previous reason. Buy what you can afford and stay away from the monthly payment mindset.

  2. Elizabeth Barske says:

    A personal home is a poor investment because you have to put much more money into it than what you generally get back. Not only are you paying off a loan to own it, but you also have to take into account yearly expenses such as maintenance, upkeep, and insurance. To reduce your losses on your home purchase, you can wait and save for a larger down payment, which will reduce the amount of your loan and the amount of interest you will have to pay over time. You can also wait to buy until your credit score is above 760 so that your interest rate will be lower over the life of your loan.

  3. Axel Hoogland says:

    A home is poor as a financial investment but can be good as a personal investment. It can lend security in that you have a place to return. Homes are not bad. But as far as finances they can cost a lot, if you desire a large home that has closing costs on sales, high maintenance costs, high taxes, and is in a place that you feel the need to “keep up with the Joneses”.
    To reduce the costs of a home you should purchase/sell as infrequently as possible. Buy if you will be somewhere a long time.
    Learn to do maintenance yourself. Think of how much space you really need! Do you need a huge home or can you actually get by with much smaller than you think? This will have you pay lower taxes.
    Another thing to lower overall costs is to get a roommate. You can then generate income from your home instead of only be paying into it. Likely the roommate will pay you less than they would pay an apartment complex. Win-Win situation.

  4. Adam Luloff says:

    When you look at a purchase after cost it will be a loss. The appreciation will not make up for the yearly cost and there is no guarantee your house will appreciate. The best you can do to save money is get your credit score up to 760 before buying, shop around for intrest rates from multiple lenders, and save more than 20 percent for a down payment to avoid paying PMI or a second mortgage (also to keep your emergency account funded). Also be sure to keep your house payment below 30 percent of your gross income, and if you can do this while getting into a 15 yr fixed rate loan you will save yourself thousands in the long run.

  5. Mike Finley says:

    Well said everyone. I have nothing to add. Nice work!

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