Personal Finance Resource Guide

As we talked in the earlier article you own more of a property as more payments are made during the time you are paying off the loan.  In other words you don’t own the house if you have a mortgage, it is the bank property until you pay it off.   Since for most people their home is one of their largest assets and biggest debt until it is paid off it is in their best interest to pay it off early and stop sending their money to the bank and stop working for the bank as soon as possible. 

Purchasing property can be a daunting task.  There are many steps, people and organizations involved to make it happen.  It can be confusing but it really is not, but there are professionals to guide you through the steps as well if you chose to. The key point to remember is that it is your money not theirs; so don’t be shy to ask questions, make sure you get the best service and your questions are answered clearly and you understand.  After all you are the one that has to live with the consequences and end up with payments for the next 15 or 30 years!

How do you know if you can afford a particular monthly payment? There are many factors involved; for example how much money you have saved or if you have a rich uncle who can bail you out when trouble comes. If you don't have a rich uncle here is good guide to manage your personal finances conservatively.

Assuming that you plan to pay off your mortgage debt via your monthly take home pay; a good guide is to spend no more than half of your monthly take home (after tax) on mortgage payment, property taxes, insurance and any other fixed cost you will have to pay each month (such as home owners association fees) combined. This way the next half of your income can be spent paying for food, utilities (water, heat etc), entertainment and saving for retirement!

When purchasing realestate the mortgage for it can be one of the biggest expense to cover, of course we are talking about a conventional 15 or 30 year loan here.  Those fancy loans of ARM and interest only are a different ball game and generally are not suited for the average person buying a property to live in as their primary home.  If you are looking for that kind of information it is not here – sorry! We are not a big fan of those and they can get you in trouble if you don’t know what you are doing.

If you are reading this section you are probably thinking of purchasing a property.  Let’s say it is a home, a place you are going to call yours and live in as opposed to a house which you may have less attachment to and care less about. We will call the latter an investment property (may be a second home) or rental and will cover it here. 

Realestate increases what? Personal wealth? In this market? Yes, owning realestate increases your personal wealth. Managing your personal finances is key to guide you to more wealth, owning a home - purchased at the right price -  and paying it off is a sure way to get you there.

Just remember, we are talking about your home.  A place you intend to live in for a long time; it is the roof over your head, a place to go to relax and raise the kinds. Something you should not be taking risks on.  Our examples are not the folks who speculate on real estate.