Rich House, House Poor
What does it mean to be house poor? According to the website Investopedia, the definition of house poor “describes a person who spends a large proportion of his or her total income on home ownership, including mortgage payments, property taxes, maintenance and utilities. House poor individuals are short of cash for discretionary items and tend to have trouble meeting other financial obligations like vehicle payments.”
There are two ways to become house poor. Sometimes funds for essentials, such as mortgage, property taxes, maintenance and utilities, coupled with living expenses are underestimated or life circumstances change the amount of your total income. That is why budgeting and knowing how much cash you will have on hand after your mortgage payment is vitally important.
“Experts say consumers should plan to spend approximately 25 percent of their income on home expenses,” the Investopedia website reported. “If a homeowner has few other expenses or no additional debt they could potentially spend up to 30 percent.”
With older existing homes expect the unexpected, because there may be more expenditures with maintenance and upkeep. With new homes that is much less of an issue.
If a new home is in your future, check out David James Homes. With numerous family-friendly floor plans available, generous standard features and numerous options from which to choose, David James Homes may be the solution to your home-building dream. To find a design center near you, visit www.davidjamescustomhomes.com/#location.
Tags: David James Homes, House Poor, How much house do I need, Mortgage Payments, New Home buying