82: How to Buy Real Estate Like a Pro
Rich Habits Podcast
Budget Wisely to Avoid House Poverty
Falling in love with a property can cloud financial judgment, especially when lenders offer larger loans than one can afford. To avoid becoming house poor, it's crucial to adhere to a monthly mortgage budget that shouldn't exceed 30-35% of take-home pay. This discipline protects against future financial strain by ensuring enough funds remain for investments and daily expenses. Calculating an affordable mortgage payment based on net income helps establish realistic borrowing limits. Pre-approval should align with the established budget to create a disciplined shopping approach. Additionally, homeowners must consider extra costs—maintenance, HOA fees, and other expenses—beyond the mortgage, including private mortgage insurance (PMI). Staying within budget and avoiding tempting upgrades that stretch financial limits is essential for long-term stability and financial health.
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