"You Want to Buy a House? hahahaha" - my dad

Now is the time to buy a house (or condo, apartment, cottage). Everyone involved in buying houses says so. Heck, I'm saying it because financial institutions want to pay me money to get people to come borrow hundreds of thousands of dollars off of them, securing their financial security for decades to come (the institutions, not you).

Statistics that I am pretty certain exist somewhere show that most people prefer to live in some type of domicile that can hold not only all their stuff, but perhaps even have sanitary facilities, a lockable door, electricity and windows without bars.

Expectation

So why should you wait? If you are like most people you probably are waiting because you saw those for sale signs on people's lawns, checked out the price on the internet then sadly looked at your bank account or paycheck and thought WTF?

Reality

The concept of purchasing a residence of your very own slides quickly away as you wonder how the heck anyone not born in the sixties or seventies who is not on television or in banking can afford to buy such a luxury when you are still budgeting to pay off your student loan, your credit card and/or returning bottles for bus fare to get to work and back.

A nice compromise but for the travel. 

There is a sense of security that comes with having your very own place, but also a sense of ... 'Uh oh'... if you decide to buy a house that you can live in but not do much else. It's often called 'house poor'. All your disposable income you thought you had at your fingertips is destined for 'house-related' things. Perhaps you need a new fridge or have neglected to factor in property taxes. You have crap windows so your heating bill triples during winter. The roof has started to leak or you have a severe bug infestation which would make Mike Holmes shake his head in disgust at how a house like yours could possibly even be in existence.

We will have to tear out the kitchen and
may as well finish your basement while we are at it.

If you already are a home owner, you know what I am talking about. You need to pay for all of these unexpected expenses somehow. If you don't have kids maybe you can bring in a couple of roommates, forget the concept of privacy for a couple of years (and maybe your television when they move out in the middle of the night). But I'm getting ahead of myself.


I was talking about being House poor. You hear of people that are so poor that they have to live in their cars. The cynical among you would say 'if they are so poor, why do they have cars?'. Well, the same could be said of people who own a house but can't afford to do anything outside of it. Instead of car poor, they're house poor. This is a great article by a woman who has made a living out of helping others with their debt, a lot of it entailing that they are home owners who can barely afford to make mortgage payments.

Most financial institutions want your debt ratio to be at the maximum 35-40% of your yearly income. This is considered a 'reasonable' amount that one could live off of and afford to make mortgage payments while not have to start turning tricks or becoming Walter White.  Mortgage brokers who quote this number after looking over your financial situation then say something like 'oh, you'll be fine' are not thinking of your best interests but their wallet's interests. Most brokers get paid commission so the bigger the sale, the bigger the commission. It's that simple.

What if instead of purchasing a house that is at your upper limit of budgeting you lower that bar for few years. Maybe don't buy that 5 bedroom house for your yet-to-begin family to grow into and instead buy a simple starter home or condo that only takes up 25% of your total earnings? Not only will it allow you to experience the joys of being a home owner on a more manageable scale, the money you may be able to save will help you purchase that bigger home in a few years time. With the right amount of care, smart upgrades, and an eye on the housing market that starter home can also be a reasonable investment which will further help you purchase that dream home of yours.

Houses will always be for sale, financial institutions will always want to sell you a mortgage. What you want is a broker that will sell you a mortgage that doesn't put your future at risk.

Or who's personality feels like this...

Buy the house that you can afford for the now, save for the house you can buy in the future. Feel free to leave comments, suggestions, stories in the section below. Seriously. It's free.