Don’t let emotions drive your financial decisions. Crunch the numbers, and choose a lifestyle that’s sustainable and comfortable.
Buying Beyond Your Means? It Might Be Smarter to Rent
Many people say:
“There’s no such thing as a $280,000 home anymore!”
If that’s the case, renting may be the more responsible option.
Your decision should be based on what your income can support, not what the housing market is tempting you with.
The 5% Rule – The Minimum Annual Cost of Owning a Home
Owning a home involves at least these three yearly costs:
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3% mortgage interest
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1% maintenance
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1% property tax
Example:
Home price: $500,000
→ Total annual ownership cost = 5% = $25,000
→ About $2,080 per month
If rent is cheaper than $2,080/month, renting is the financially smarter option.
The 20/4 Rule – A Smarter Way to Buy
To avoid financial stress, follow two simple guidelines:
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Make at least a 20% down payment
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Don’t buy a home priced over 4x your annual income
Example:
Annual income: $70,000
→ Max home price: $280,000
→ Down payment: $56,000
→ Mortgage: $224,000
→ Monthly mortgage payment: approximately $1,302
If you’re paying more than $1,302 per month, you’re stretching your budget too far.
Real Monthly Costs for a $280,000 Home
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Mortgage payment: $1,302
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Property tax: $140
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Condo fees (maintenance + insurance): $400
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Utilities (electricity, water, internet, heating): $600
→ Total housing cost: $2,442/month
Personal living expenses: around $1,150/month
(Food, transportation, insurance, coffee, groceries…)
→ Total monthly spending: ~$3,592
Take-home pay from a $70,000 salary: ~$3,600/month
→ You’re left with almost nothing.
Final Thought
A house is just a roof over your head. Unless you’re buying with full cash or your income is high enough to live without budgeting, think carefully:
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Choose a home you can afford comfortably
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You deserve to enjoy life – dining out, traveling, relaxing
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Don’t sacrifice your quality of life just to “own a home”
“A primary residence is a liability. A rental property is an investment.”
You could own 10 rental properties – and still rent the place you live in.
Let your finances make the decision, not your emotions.
Need help evaluating your own situation? Get in touch for a personalized consultation.
