How To Made A Dumb House To A Smarter House And Some Thoughts Of Expertise....

By Author: Jyoti Vasuja
Total Articles: 4
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Don’t Think of a Home as Your Main Investment

People tend to believe that homes are appreciating assets, but this isn’t
always true. Yale economist and Nobel prize winner Robert Shiller debates
this topic openly, having crunched the numbers. He says that, overall, the
housing market doesn’t have a great long-term return. While that single real estate asset might help protect you against inflation, a well-balanced stock and bond portfolio seems to be a better investment. But a
lot of people’s portfolios are mostly made up of their home value. You
wouldn’t put 80 percent of your portfolio in a bond simply to protect against inflation (unless maybe you were nearing retirement) so why would your home make up that same amount? That’s the argument against buying a
home as investment

Decide How Much You Can Afford

In deciding whether you can afford to buy, you’ll have to figure out how much home you’re planning on buying in the first place.

1.Take-home pay (after taxes, after tax-deferred retirement contributions)
2. All of your other debt and monthly ...
... payments. He notes that if you have
high-interest loans, you should pay them down before looking to buy a home.
3.Consider your other priorities (children, retirement)
4.Calculate your down payment amount. It might make more sense to save
and wait.

5.Use a mortgage calculator to see how much you can afford, but add in the
estimates for the above costs.
6.Leave a cushion in your monthly budget between income and total monthly
expenses.

Weigh the Opportunity Cost of Renting Vs. Buying

While your home might not be the best investment, in the end, it’s still yours.Even if it barely outpaces inflation, at the end of the day, you own it, and that’s worth something. You rent, you own nothing—the money is given to someone else. So lots of people argue that you should own a home because one day, you’ll pay that home off and it’ll be yours, rather than continuing to pay rent for the rest of your life.

Sometimes, you can actually earn more money over time by renting and
investing than buying. But whether or not this is true depends on a few
factors:

1) Your rent cost: If your rent is cheaper than your mortgage, you may be
able to invest the difference and earn a better return, long-term.
2) Down payment & mortgage interest rate: Same story here. If you
invested $50,000 instead of using it for a down payment, and also invested
the amount you paid in interest over time, how much more would you have in
the long term? In some cases, you’d have more than the value of your home.
3) Where you live: The housing market depends on many factors and
changes, but where you live is a big one. Your rent prices and home prices
may be a lot different than the national averages.