Subscribe: 
“If people have their heart set on something, inevitably, if they can’t afford what they really want, they buy the next best thing. That’s absolutely the worst thing you can do. Not only do you not get what you want, but it sucks you dry.”
- Michael Kalscheur, a financial planner with Indianapolis-based Castle Wealth Advisors, who advises home buyers to either find their dream homes (if they can afford them) or starter homes, but nothing in-between. Kalscheur is one of several planners quoted in last week’s New York Times article on the “seven new rules for the first-time home buyer.” (Hat tip to the Brownstoner blog for the link.)
Kalscheur’s reasoning? Entry-level homes will save buyers more money each month after making the house payment than slightly fancier homes would, making the truly perfect home more attainable further down the road (provided the buyers are actually spending and saving wisely in the meantime).
Other tips from the article: “Put 20 percent down,” “get a fixed-rate mortgage,” and “don’t spend more than about 35 percent of your pretax income on mortgage, property tax and home insurance payments.”
Related posts:
{ 2 comments }
Am I alone in seeing Kalscheur’s take as bizarrely myopic?
It may make some sense from a “wealth advisory” standpoint, but completely ignores all of the other, more relevant aspects of selecting a place to live. The “next best thing” is almost always about a lot more than the home itself.
I often find you can “do without” on the next-best-thing. Maybe you wanted two baths, but settled for a one bath in a good location. You’ll enjoy the location more than the second bath.
I guess that’s not even the point here… the point is don’t spend too much if you aint’s got it. If the the “next best thing” is spending too much, making the dream home unattainable anyway. So, it’s starter homes for everyone!
Comments on this entry are closed.