How to avoid becoming house poor
Ramsey Solutions financial expert Chris Hogan on a new report that millennials view owning a home as more important than marriage and having children.
You’re looking at your dream home, you’re ready to make a down payment, only there’s one little problem — you can’t really afford it.
This is a mistake that financial expert Chris Hogan has seen people make time and again.
“I’ve talked to a lot of people that have bought too much home and now they are what’s called ‘house poor,’ which means too much of their income is going out to the payment,” he said Tuesday during an interview on FOX Business’ “Mornings with Maria.”
Even so, the rate of foreclosures in the U.S. has steadily declined and is actually at the lowest level in 12 years, according to the latest data from CoreLogic.
And despite the housing bust that swept the nation more than a decade ago, Hogan said it’s still worth ponying up if you can afford it.
“Real estate can be an incredible investment,” Hogan said, “You just need to go into it with your eyes wide open.”
In order to avoid making this costly error Hogan said it’s important for people to take their time, pay off debt and save up.
“We’ve all heard the lesson location, location, location,” he said. “But I would say this – ‘time, time, time.’”
“You need to free up your income by getting yourself out of debt and building up an emergency fund so you’ve got some cushioning between you and life happening.”
Hogan said it’s also important to find a reliable real estate broker to understand the market.