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Financial Hack To Own A Home In Todays Market

  • 3 min read

The Sobering Reality of Housing Costs
Here we are once again, contemplating the housing options for consumers, prompted by a thought-provoking article in Deseret News. The central question looms large: Can anyone afford to live in America anymore? At first glance, it may seem implausible to own a home at a reasonable price, especially considering the current median home price exceeding four hundred thousand dollars, leading to hefty mortgage payments of four to five thousand dollars monthly, which for many may be out of reach.

Escalating rent woes
Adding to the dilemma, rents for decent apartments have skyrocketed in many places, reaching levels of 2500 to 3000 dollars per month. This surge in rental costs raises a legitimate concern: Can anyone truly afford to live in America? However, delving deeper into the issue reveals potential options for consumers striving to secure a home they can truly call their own at an affordable price.

The Challenge of Rental Approval
Illustrating the challenges, the article shares the story of Brita Joslin, earning an annual income of $83,000 yet struggling to secure a rental apartment. Surprisingly, landlords demand proof of an income that triples the rent, leading to an insightful analysis of the financial constraints faced by prospective renters.

Crunching the numbers
To further dissect the issue, let’s engage in some calculations. Using a hypothetical scenario with a tax rate of 25%, an $83,000 income results in a take-home pay of $62,250 annually. Dividing this by 12 months yields $5,187 per month. When landlords insist on a third of the income for rent, the feasible amount is $1,700 per month. However, finding a decent apartment at this price, especially for families, can be a challenging task in certain cities.

Out of Reach for Many
The article underlines a broader concern: median wage earners in 97% of counties find home prices to be out of Reach. This stark reality pushes many individuals to explore alternatives and potential pathways to homeownership.

Bridging the gap
Examining the numbers using a mortgage calculator, the article suggests a viable solution. To keep mortgage payments within a reasonable range, individuals with an $83,000 income might need to consider homes priced under $300,000. The challenge, however, lies in shifting perceptions, as many aspiring homeowners aim for dream houses with a higher price tag.

Embracing Practicality in Homeownership
The advice given is straightforward: if you find a livable house in the two-hundred-thousand range with a monthly mortgage payment under $2,000, consider making the purchase. Cosmetic improvements can be tackled over time, ensuring a fixed monthly payment and home equity, outweighing the allure of newer but pricier apartments.

The Long-Term Financial Advantage
Highlighting the trade-off between immediate aesthetics and long-term financial benefits, the article emphasizes that sacrificing some luxuries in the short term can lead to substantial gains down the road. Owning a home may not offer the same shiny and new appeal as some rented apartments, but it provides stability and financial security.

Affording a Home, Not Necessarily the Dream Home
The conclusion challenges the notion that nobody in America can afford a home. While it may be true that the dream home with all the amenities might be out of reach for some, a realistic and pragmatic approach can put individuals in a better financial position. Homeownership, even in a more modest dwelling, opens avenues for future financial growth, potentially allowing individuals to upgrade their homes in the future with accrued equity.

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