You are driving your house!

This week I have helped several people buy their first home, a relatively regular week for me. Without trying to attack car dealers, car lovers, or everyone that drives a car, let’s admit there’s an issue in this country with priorities at least in comparing what we are willing to do for a vehicle compared to a home purchase. You see, I have seen both sides as a banker doing a LOT of car lending, and now as a mortgage specialist.

Nearly every day, I see a $500-1000 car payment per month! There are some in the professions above and certainly as a consumer, that would say to us that “there’s nothing wrong if you can afford it.” However, the issue is that when you are looking to buy a home, debt to income is a very real concern. Oftentimes, the one who could “afford” that car, can’t afford the additional debt of a home on top of that vehicle debt.

$500 where I am at is a modest rental property payment or small apartment rent. $1000 could be a modest home or rent as well. So when you are “renting” a depreciating asset (car, truck, anything with 4 wheels), then that takes a huge chunk out of your buying ability for a stable asset, your home.

Add to that any other auto payment (they seem to come in two’s and don’t even think of adding another by co-signing!) or recreational vehicle, and we unfortunately have a lot of depreciating assets (assets that aren’t worth what you paid for it, sometimes less than what you owe on it) keeping you from owning the one asset that does pay you back in equity over time and also gives you a roof over your head.

There are so many real benefits to home ownership that it is sad that we have devoted so much attention to what we do for a short time (driving) and not what we do for hopefully at least 8 hours a day (sleeping in our own bed in our own home) and much of the time nights and weekends. Some are fortunate enough like me to work from a home office even. It is true that there are people who want to rent, ask to rent for short periods of time, and want to live a life of adventure before settling down. But most people have that desire at some point to call a place home and feel that they are more secure buying than the momentary payment of their next month’s rent. And for that majority of us, we need to be careful that we are not driving our “house payment” and renting an apartment!

By the way, did you know you can refinance a car to get down payment? That topic’s next! See the reformed banker for your next home loan…