Suze Orman shares the financial checklist that could save you from a home-buying disaster.
Transcript:
Suze Orman: I think the housing market is becoming very interesting in that I think maybe you’ll see mortgage rates come down a little bit, but not a lot. So it won’t make that much of a difference. I think given what’s happening with tariffs and everything right now. You’re going to see the price of steel and aluminum and wood and everything go up dramatically. So to build a house or repair a house or do anything like that, it’s going to be a lot of money. There is more inventory that’s going on the markets right now and houses are on the market longer than normal. So it’s not about the housing market per se. It’s about your own personal situation. Is your job secure? While the federal government, they all thought their jobs were secure. Not true. So is your job secure? Do you have a 20% down payment? Besides the 20% down payment, do you have an 8 to 12 month emergency fund? Do you have all those things in place and can you really afford it, so you best think about it. Insurance? forget about it. In many places. Good luck getting insurance on a home. Insurance could be actually more than your mortgage, so you better figure out what is your insurance property insurance going to be to insure that house.
You know you’re ready to afford the home if you’ve had a lot of extra cash. You know, the sad thing is, a lot of you think, all right, I’m renting a place right now for 2000 a month. I find a home that I like, and the mortgage is 2000 a month. And you think, well, obviously I can afford that. Don’t be silly, everybody. 2000 a month of rent is not the same as 2000 of a mortgage. Besides the mortgage payment, you have property taxes, you have insurance, you have maintenance. You should increase that 2000 by 40% And can you afford $2,800 a month and, you know, you can really afford that if for six months before you actually purchase it, play house, put that $2,800 every month or 2000 to your rent and $800 in a money market fund for at least six months. Do you have enough money to function well? Do you still have, you know, an eight month emergency fund? Are you great with all of that? Are you totally out of debt? If so, you can afford a home.
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