Responsibly managing your home
So if your house isn’t your “biggest investment,” what is a person to? You have to live somewhere. That’s an important question, but there is no easy answer. If the solution had to be narrowed down to one thing it would be “responsible money management.”The biggest problem with the real estate and financial markets in modern America is that we have all gotten into the habit of spending money without considering the consequences. Oftentimes, the money is borrowed in the form of a mortgage loan or credit card. We have all become so entrenched in the rat race that we live our lives in a perpetual cycle that always keeps us from becoming truly financially free.
Thankfully, it is easy to escape this pattern with forethought and discipline. A good first step is to change your view of the role of the house. Once you stopping seeing it as an unlimited piggy bank, you are on your way. Here are a few things you should consider in the future, when faced with a decision regarding your home:
- Downsizing – Or at least, quit buying bigger and more elaborate homes simply because you can. If you are buying your first home, don’t go overboard. just because your real estate agent or parents suggest you plan ahead and buy big doesn’t mean you should. With our collective track records over the past twenty years such advice now seems questionable. By buying smaller you don’t have to be house-poor. You don’t have to resort to constant refinancing or high credit card debt to enjoy life. You might even be able to consider a shorter loan term than 30 years, which will help to pay down your mortgage more rapidly, thereby putting more money into your balance sheet more quickly.
- Avoid moving too often – If you’re the type of person who buys a new house every few years, you also need to realize that you are paying a lot of fees to mortgage brokers and real estate agents each time you move. Between points on a loan and agent commissions, paying an 8% premium for a property is not uncommon. Maybe even more. This is money that you will never see again and it adds up pretty quickly if you move 4 times in 10 years. We’re talking tens of thousands of dollars here.
- Avoid refinancing – While there are times when this is unavoidable, way to many people refinance their homes every few years. As discussed in <a href="http://stlresociety.com/other_topics/financing/your-ho