House Poor

I hear buyers say all the time that they don't want to be 'house poor'. Yet many of these same buyers end up leaving my New Home Sales Center and making an offer on a pre-owned home.

So what is house poor?

For some it can mean buying more home than they can comfortably afford. That means fewer vacations and fewer nights eating out. It means staying home and saving money for the mortgage payment, or for repairs to the AC system, landscaping, kitchens, bathrooms and the myriad of issues that can go wrong when you own a home.

One way to avoid being house poor is to build a new home or buy an inventory home from a builder. In this market new homes are selling at about 10% more than existing homes. For a $300k home that is about $30,000 more for brand new, or about $150 (at current rates) per month more in a mortgage payment.

Consider this. Your new pre-owned home may be a tad larger than what you could have afforded in a new home. But it also comes with risks. The risk of needing a new roof, or a new heating system, or new plumbing under the slab which will cost a small fortune and guarantee that you will be 'house poor' for quite a while.

A brand new home comes with all brand new everything. Brand new heating system, brand new roof, brand new appliances and foundation. It also comes with a brand new home warranty. There is no price you can put on that kind of peace of mind.

So if you are buying a home this year, consider building a new home or looking at builder's inventory homes. It's probably the best thing you can do to avoid being house poor. And that vacation fund you have been building up? You won't need to skip the vacation to pay for some expensive home repair. You can take that vacation and enjoy yourself! Peace of mind. Buy new.