Reality of Realty: Understanding "House Poor": What It Means and How to Avoid It

By: Valerie Davenport

[TRANSCRIPT]

Hey future homeowners, welcome back to my channel, Reality of Realty; I’m Valerie Davenport. And, as your trusted real estate guide, today we’re looking to understand what it means to be house poor, and how to avoid it!

Also, if you like videos like this and other behind the scenes peeks into what it’s like to be a realtor, don’t forget to like, share and subscribe so you’ll be notified when new videos are published.

And,whether you’re moving across the nation or across the street, tap into my resources by emailing me today using the email in the description box below. Now let’s get into the video.

Hi everyone, welcome back to my channel! 

Today, we’re diving into an important topic that many homeowners don’t realize until it’s too late—being ‘house poor.’ Let’s break down what that means and, more importantly, how to avoid it!

So, you’ve just bought your dream home—spacious, modern, everything you’ve ever wanted. But then, the bills start rolling in: mortgage payments, property taxes, utilities, and repairs. Before you know it, almost all your income is going toward your home, leaving you with little room for anything else. That’s what we call being ‘house poor.’ It’s when your housing costs consume such a large portion of your income that you struggle with savings, emergencies, or even just enjoying life.

First things first, understand your budget. It’s easy to fall in love with a house that’s a bit out of your price range, but staying within your means is key. Experts recommend that housing costs—meaning your mortgage, insurance, and property taxes—shouldn’t exceed 28-30% of your gross income.

Don’t forget about all the other costs that come with owning a home! Beyond your mortgage, you’ll need to budget for insurance, property taxes, utilities, and maintenance. It’s also wise to set aside 1-3% of your home’s value every year for unexpected repairs. This helps you stay ahead of any surprises that pop up.

Just because a lender approves you for a large mortgage doesn’t mean you should take it. Remember, your lender looks at your gross income but not your lifestyle. Make sure your mortgage allows you to live comfortably, save for the future, and enjoy your life beyond your home.

If possible, aim for at least a 20% down payment. This reduces your monthly payments and can save you from paying for private mortgage insurance, or PMI. A larger down payment means smaller loans and more manageable monthly payments.

Before buying a home, build an emergency fund. Life happens—roofs leak, jobs are lost, and medical emergencies arise. Having 3-6 months of living expenses set aside will give you peace of mind and protect your financial stability.

When choosing a home, think about your future financial goals. Will this house allow you to save for retirement, your kids’ education, or maybe those dream vacations? Your home should help you achieve your goals, not hold you back from them.

At the end of the day, owning a home should be a joy, not a burden. By understanding what it means to be house poor and taking steps to avoid it, you can enjoy the benefits of homeownership without sacrificing your financial health. So, as you prepare for this big decision, make sure you choose a home that fits both your lifestyle and your budget.

The right home brings financial security and personal satisfaction. Happy house hunting!"Outro music and text overlay: "Don’t forget to like, subscribe, and hit that bell icon for more tips on making your real estate journey smooth and successful!"

So that’s it for today’s video. I’ll wrap it up here by saying thanks for tuning in to the very end! If you found this info helpful, don't forget to like, share and subscribe, and hit that notification bell for more real estate insights. Until next time, happy house hunting!