Learn what being “house poor” really means and how you can avoid it.
House Poor – A Definition
A house poor buyer struggles to make monthly housing payments for a variety of reasons. For example, some house poor folks have bought too much house or have taken out a mortgage that is far too large for their salary.
Now that you understand this phrase, continue reading for a handful of effective ways to avoid it in your current or future homebuying experiences.
1. Know (And Stick To) Your Price Range
Creating and staying within budget is the first way you can avoid being house poor. Your housing expenses (mortgage payment, taxes, and insurance) should amount to no more than 40% of your monthly income.
2. Build Your Savings
A homeowner who is house poor always has little-to-no financial wiggle-room. This is why having a solid savings account sets a homeowner up for success. Create wiggle-room by having an emergency fund to prevent becoming house poor.
3. Minimize Debt
When a mortgage is added to a credit card payment the numbers can add up quick. Keep your consumer debt low and focus on quickly paying off your credit cards.