For a lot of people, the pressure and pride of owning a house, let alone, a big house is enormous.
One of the many reasons why the masses are trapped in poverty and the middle class is the fact that people in general, exert too much effort in looking rich than educating themselves and taking the time to train themselves to actually become rich.
Not surprisingly, too many people are lured into buying the biggest, newest and most grandeur house that they can afford; as their first home and for others who already owns a home, the itch of moving into the most expensive home is suffocating.
For most, the decision of buying a home is mostly emotion-driven and the number one determining factor is for entertaining guests than any other.
Aiming to buy the most expensive house that they can afford isn’t entirely the homeowner’s fault, rather, we have the market to blame for it – banks and mortgage lenders will approve you the highest loan you can afford if you’ve been employed in the last six months, and Realtors’ advice would always hit the home run for a “dream home” – yes, it’s always the dream home!
So, why am I not impressed? Here are 10 reasons why…
1. You Can’t Afford It!
Ouch! Reality bites, really. I know, you, your realtor and lender will disagree. “But, but, but… I was approved for a $450,000.00 mortgage!”
Yes, of course, you were approved but how long do you have to work at a job just to pay off your mortgage? And did you know that mortgage comes from a Latin word “mort” and “gage” which literally means “death pledge”?
With mortgage of half a million and only 5% downpayment, you’ll most likely, be in debt till death!
That’s another ouch, right there.
And how many jobs do you have to maintain so you can afford to live in a house you can’t afford? A lot of people I know have two to three jobs. They could be the hardest working people I know but they would never get rich because, technically, they’re barely making it.
2: Your Home Is A Liability.
Before we go further, let me ask you…
How do you define the word “liability”?
A liability can be anything that takes away money out of your pocket every month. If you have an expensive house and you just live on it, and it eats away cash from your pocket every month, then it’s a liability and you have to either get rid of it for a profit, rent it out, or rent part of it so it becomes an asset.
Speaking of “asset”, an asset, of course, is the opposite of liability. Assets in general, are the stuff you own, or rent that puts in money on your pocket month after month!
3. A Big House Is Expensive to Maintain
Aside from the fact that you’ll be looking at high amount of mortgage payments, property taxes and home insurance. Maintaining a big house will cost you more money in utilities like electricity, heating, cooling, and for some instances even water because naturally, it’s going to eat a lot of those.
4. More Difficult to Maintain
Not unless you can afford to pay a cleaner to do all the cleanin’; you’ll be putting in a lot of your time making your home look good.
5. An Expensive House Requires Expensive Furniture
With a small house, splurging on furniture is an option. This is not the case with big houses of course; if a big house makes you look and feel rich, then there’s no room for inexpensive furniture on that space. Furniture in general, should of course, match the house – and if your house is expensive, so are your furniture.
6. Forces You to Buy More Stuff (Stuff You don’t Need)
With all that space, there would be no room for any act of minimalism. A big house will unknowingly force you to accumulate things you think are assets.
Looking back at all the reasons why you shouldn’t buy a big house above, don’t you think it’s quite stressful to own one, specially when you really can’t afford it?
8. Keeps You at the Rat Race
Have you ever asked yourself, when you would want to stop working at your day job? If you’re maitaining a money-eating property that doesn’t make you any money, that would be an even harder question to answer.
If you bought your house at say, age 35 and it took you 25 years to pay off your mortgage, you’ll be sixty by then and considering that most of the money you earned during your productive years went to paying off that mortgage. You’ll most-likely have to continue working passed the age of 65. Trust me, most people do, not because they want to, but because they need to and fact of the matter is, you may not have paid off your mortgage by then because if you remortgage it once, you’ll be looking at a longer road trying to get off that debt trap.
9. Stops you from Investing
When people earn money, they have to make an important financial decision. Either they spend the money or save it to invest. If you have a huge obligation such as an expensive house, that decision will be a no-brainer as your money will automatically go to your monthly amortization. This is what is meant by the phrase, “house rich, cash poor” because all the money you earn, specially if you’re a fixed income earner will most-likely go into paying off your mortgage.
10. It Doesn’t Make Any Financial Sense
The pride of owning a beautiful home makes you feel that you’ve accomplished something; no wonder everyone’s rushing to get a mortgage approval from the bank but let me tell you that the “owning” part here, is merely an illussion perfectly positioned by the banks, mortgage lenders and realtors” No offense if you’re a realtor, but do you really think that you actually own your “mortgaged home”?
Fact is, your bank or lender owns that home and if you ever try to miss a payment; they’ll take that property away that property in a snap. Of course, not right away, but you know what I mean!
Not unless you bought the house cash or you’ve paid off your mortgage, will your house be yours, but then again, it’s still not yours entirely. Why do you think, you’d still have to pay property taxes even when you already paid off your property? The state or your country owns that.
Can you see how the syndication works?
That’s why it doesn’t make sense to buy the most expensive home you think your salary can afford because it doesn’t make financial sense to throw away your hard earned money at a house you will never fully own and get trapped in the rat race trying to impress others, who in reality, won’t really care how much of a house you’ve got.
Buying a home is one of those major decisions that could potentially affect your life and that effect could last for more than 20 years so you have to think about it and talk with your spouse as the effect may be negative or possitive.
We all want a decent home to house our families in but it doesn’t mean that it has to stop you from achieving your financial goals. If all your financial resources are being eaten up by liabilities you think are assets, you have to re-evaluate your situation and be willing to make a drastic change.