Buyin Home Smart Financial Decision
The following info I got from MSN on Buyin Home is a Smart Financial Decision
Yup, the cliché is true: Buyin a home is one of the smartest financial decisions most people will ever make. Don’t take my word for it. Take the Federal Reserve’s. Its Survey of Consumer Finances has consistently found a huge gap between the wealth piled up by homeowners and that accumulated by renters.
Source: VIP Forum, Federal Reserve Board
Home ownership builds wealth in two ways: through the “forced savings” of paying down a mortgage, and through appreciation -- the rise in the home’s value over time.
The earlier you get in the game, the quicker you can get that appreciation working for you. The longer you wait … well, the consequences can be stiff
4 keys to profitable home ownership
You’re most likely to win by owning, rather than renting, if the following are true:
• You plan to stay put at least three years and preferably more. In most markets, it can take three to six years for a home to appreciate enough to offset the costs of selling and moving.
• You’re psychologically prepared. Home ownership means dealing with whatever comes up -- from noisy neighbors to clogged plumbing. You can’t just call the landlord for help or pack up and move as easily as when you were renting.
• You have some extra savings. Home buyers who spend every dime they have buying a house inevitably are blindsided by repairs, maintenance and all the other costs of owning a home. Then they go into debt trying to keep up their current lifestyle. Smart home buyers make sure they have an amount in savings at least equal to two mortgage payments after the deal closes, and preferably much more.
• You manage your money pretty well. That “forced savings” aspect I discussed above works only if you can keep your hands out of the cookie jar. Otherwise, it’s too easy to drain away your wealth with home equity loans and lines of credit. If you’re the kind of person who lives on credit cards and doesn’t know where the money goes, you’d be smart to clean up your financial act long before you go hunting for a house.
I should have bought a home in Fiji a long time ago but was always on the assumption that I would be leaving Fiji.
Currently my rent is around $300FJD a month so I always thought that because the annual rent was significantly less then what I would have to pay in interest I would be saving money.
But I didn’t take into consideration the following to my detriment.
One thing about me which is strange, is my concepo of buying things as my only shoes are a pair of two year old second hand sandals that has been sewn up at least three times and I just can’t buy something useful but can easily go and spend $200 drinking shots on a night out.
I am more into gathering experiences/knowledge then material wealth. The only problem with that is when your memory starts fading.
So I am not the best person for investment advice
At least I have my family house in Geelong Australia, Tribe house in the Village and our Beach to go if things turn to custard .
Yup, the cliché is true: Buyin a home is one of the smartest financial decisions most people will ever make. Don’t take my word for it. Take the Federal Reserve’s. Its Survey of Consumer Finances has consistently found a huge gap between the wealth piled up by homeowners and that accumulated by renters.
| Average net worth of homeowners vs. renters | ||||||||||||||||||
|
Home ownership builds wealth in two ways: through the “forced savings” of paying down a mortgage, and through appreciation -- the rise in the home’s value over time.
The earlier you get in the game, the quicker you can get that appreciation working for you. The longer you wait … well, the consequences can be stiff
4 keys to profitable home ownership
You’re most likely to win by owning, rather than renting, if the following are true:
• You plan to stay put at least three years and preferably more. In most markets, it can take three to six years for a home to appreciate enough to offset the costs of selling and moving.
• You’re psychologically prepared. Home ownership means dealing with whatever comes up -- from noisy neighbors to clogged plumbing. You can’t just call the landlord for help or pack up and move as easily as when you were renting.
• You have some extra savings. Home buyers who spend every dime they have buying a house inevitably are blindsided by repairs, maintenance and all the other costs of owning a home. Then they go into debt trying to keep up their current lifestyle. Smart home buyers make sure they have an amount in savings at least equal to two mortgage payments after the deal closes, and preferably much more.
• You manage your money pretty well. That “forced savings” aspect I discussed above works only if you can keep your hands out of the cookie jar. Otherwise, it’s too easy to drain away your wealth with home equity loans and lines of credit. If you’re the kind of person who lives on credit cards and doesn’t know where the money goes, you’d be smart to clean up your financial act long before you go hunting for a house.
I should have bought a home in Fiji a long time ago but was always on the assumption that I would be leaving Fiji.
Currently my rent is around $300FJD a month so I always thought that because the annual rent was significantly less then what I would have to pay in interest I would be saving money.
But I didn’t take into consideration the following to my detriment.
- House prices rise eg majority of houses is the Suva area have doubled and some have tripled in the last ten years.
- It is very hard to save I have more then doubled my salary in the last five years and am currently six times my original salary in Fiji but I haven’t been able to save. Nothing like forced to save by having to pay off a mortgage.
- The reduction of the value of the Fijian Dollar and interest from Superannuation Fund
One thing about me which is strange, is my concepo of buying things as my only shoes are a pair of two year old second hand sandals that has been sewn up at least three times and I just can’t buy something useful but can easily go and spend $200 drinking shots on a night out.
I am more into gathering experiences/knowledge then material wealth. The only problem with that is when your memory starts fading.
So I am not the best person for investment advice
At least I have my family house in Geelong Australia, Tribe house in the Village and our Beach to go if things turn to custard .
posted by George at 7:14 pm
1 Comments:
To rent or buy? We did not buy a house until we really needed one as we had a free house for many years. A friend called to have lunch today and she talked about their dilemma, to rent or to buy, because they don't know if they really want to stay in this cool climate city for years!
George, your rent is cheap compared with most executive type rental houses in Suva so it is tempting to stay put. Only buy a house in Suva if you want to live there for years and years!
Hey! Too much information about your use of money. A night out costs me only about $15! A movie and a bottle of Lemon Squash!
We did live beside the sea in Fiji once upon a time, after building three small bures of plaited bamboo which cost us about $4000 at the time. It was really an outdoor life. Now I am more fussy. Our house in Oz cost about $90,000 and would sell for double or more that now. Two bungalows in the back yard are a bonus. For us it was a good decision.There is room for about eight people to live here - at present there are four. We still have $7000 to pay off though!
Post a Comment
<< Home