August 12, 2025 • 3 mins
Seeing that 75% of Americans live paycheck-paycheck and can’t afford to retire at 65 years of age, this means that they cannot afford their homes. With this statement you may think that is not right! People stay in their homes without missing payments throughout their lives.
This may be true; however, when you look at it holistically, a different viewpoint emerges. So let’s discuss.
According to the AP average price of a home is $414,000. With this scenario, Nerd Wallet says the average payment is 9%. So this comes to $37,260 leaving a mortgage of $376,470.
Closing costs average between 2-5% and by taking that 2% the mortgage comes to $384,000; and using an average interest rate of 7%, the payment comes to $2,874.
Okay that’s doable; however, we have also need to factor in averages for:
-Taxes at $3,200 or $271 per month
-PMI at 1% of the mortgage amount is $,3,840 / 12 = $320 per month
-Homeowners Insurance estimated at $2,400 / 12 = $200 per month
Total Payment Scenario is: $37,260 down payment plus $3,665 each month
So can you handle that?
Keep in mind that this is a starter home which will no doubt need improvements before long or upfront. So this brings us to the rules that you must follow:
1) If you do not have an emergency fund (3-6 months of a stipend),
2) A rainy day fund (to pay for unforeseen maintenance)
3) No credit card interest
4) You need to invest 10-15% of your gross income for retirement
If you cannot meet this criteria, then this means that you cannot afford the home.
Eventually, you will run into a situation where you’ll need additional money that you don’t have which leads to additional borrowing, leading you down a rabbit hole.
Now for the last thing . . . if you are already a homeowner and you don’t meet this criteria, consider making a change so that you can plan effectively your future.
When it comes to your retirement, it’s not timing the market, it’s time in the market.
The bottom line with homebuying is to be patient especially in times of high interest rates as the wrong decision can lead to several years of maintaining debt.
Website https://www.somethingonmymind.net/
Social Media
https://www.instagram.com/somm.podcast/
https://www.youtube.com/channel/UChec5qcZBcGkIhUU3belNDw
https://www.tiktok.com/@somm.podcast?lang=en
https://www.facebook.com/somm.podcast
https://twitter.com/Somm_podcast
Website https://www.somethingonmymind.net/
Personalfinance personalfinancetips investing stockmarket finance podcast budgeting retirement autoloans refinance credit cards 401(k) creditcards sidehustle debt-free FIREmovement budgeting studentloans mortgages wills trusts IRA economy creditscore
This may be true; however, when you look at it holistically, a different viewpoint emerges. So let’s discuss.
According to the AP average price of a home is $414,000. With this scenario, Nerd Wallet says the average payment is 9%. So this comes to $37,260 leaving a mortgage of $376,470.
Closing costs average between 2-5% and by taking that 2% the mortgage comes to $384,000; and using an average interest rate of 7%, the payment comes to $2,874.
Okay that’s doable; however, we have also need to factor in averages for:
-Taxes at $3,200 or $271 per month
-PMI at 1% of the mortgage amount is $,3,840 / 12 = $320 per month
-Homeowners Insurance estimated at $2,400 / 12 = $200 per month
Total Payment Scenario is: $37,260 down payment plus $3,665 each month
So can you handle that?
Keep in mind that this is a starter home which will no doubt need improvements before long or upfront. So this brings us to the rules that you must follow:
1) If you do not have an emergency fund (3-6 months of a stipend),
2) A rainy day fund (to pay for unforeseen maintenance)
3) No credit card interest
4) You need to invest 10-15% of your gross income for retirement
If you cannot meet this criteria, then this means that you cannot afford the home.
Eventually, you will run into a situation where you’ll need additional money that you don’t have which leads to additional borrowing, leading you down a rabbit hole.
Now for the last thing . . . if you are already a homeowner and you don’t meet this criteria, consider making a change so that you can plan effectively your future.
When it comes to your retirement, it’s not timing the market, it’s time in the market.
The bottom line with homebuying is to be patient especially in times of high interest rates as the wrong decision can lead to several years of maintaining debt.
Website https://www.somethingonmymind.net/
Social Media
https://www.instagram.com/somm.podcast/
https://www.youtube.com/channel/UChec5qcZBcGkIhUU3belNDw
https://www.tiktok.com/@somm.podcast?lang=en
https://www.facebook.com/somm.podcast
https://twitter.com/Somm_podcast
Website https://www.somethingonmymind.net/
Personalfinance personalfinancetips investing stockmarket finance podcast budgeting retirement autoloans refinance credit cards 401(k) creditcards sidehustle debt-free FIREmovement budgeting studentloans mortgages wills trusts IRA economy creditscore
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Bootoo. Hello everyone, I am David and you were listening
to the Personal Finance Tip of the Week, and this
week's topic is can you afford to live in your home?
Seeing that seventy five percent of Americans live paycheck to
paycheck and can't afford to retire at the age of
(00:23):
sixty five, this means they cannot afford their homes. Now,
you may be thinking that's not right. Many people stay
in their homes without missing payments throughout their lives. Now
this may be true, However, when you look at it holistically,
a very different viewpoint emerges. So let's discuss. According to AP,
(00:45):
the average price of a home is four hundred and
fourteen thousand dollars at the time of this recording. Now,
with this scenario, Hurdwalla says, the average down payment is
nine percent, so this would come to thirty seven two
hundred and sixty dollars, leaving a mortgage of about three
hundred and seventy six thousand dollars. Okay, so let's get
(01:06):
into closing costs. They are between two and five percent,
and if we take the two percent, now the mortgage
is at three hundred and eighty four thousand dollars and
use the average interest rate of seven percent, and the
payment comes to twenty eight seventy four. Okay, so you're
thinking to yourself, two eight hundred and seventy four dollars.
Is that doable? Eighty so, but now we need to
(01:28):
factor in the other costs. First of all, taxes average
two hundred and seventy one dollars a month. PMI or
private mortgage insurance at one percent is three hundred and
twenty dollars a month, and homeowners' insurance is estimated at
two hundred dollars per month. But keep in mind these
are just averages and based on where you live, costs
(01:50):
can be much higher. Okay, so let's add this up.
This means the total payment scenario is about thirty seven
thousand dollars down with a three thousand, six hundred and
sixty five dollars payment each month. So the question is
can you handle that? Now, keep in mind, this is
just a starter home which will no doubt need improvements
(02:13):
before long or upfront. So this brings us to the
rules that you must follow. Number One, you need an
emergency fund of three to six months in the event
that you cannot work. Number two, you need a rainy
day fund to pay for unforeseen maintenance. Number three you
cannot have credit card interest. And number four you should
(02:37):
be investing ten to fifteen percent of your gross income
for retirement. If you cannot meet this criteria, this simply
means that you cannot afford the home. And why you say,
because eventually you will run into a situation well, you'll
need additional money that you don't have, and what this
leads to is additional borrowing, and then this leads you
(02:59):
down a giant rabbit hole. Now for the last thing,
if you currently own a home and you don't meet
this criteria, consider making a change so that you can
effectively plan for your future. When it comes to your retirement,
it's not timing the market, it's time in the market.
For the most part, the odds are that you'll be
(03:19):
kicking the can down the road and you'll be working
the rest of your life, or you will not be
able to do the things in your golden ears that
you'd like to. So when it comes to the home
ownership process or home buying, make sure to be patient,
especially in times of high interest rates, as the wrong
decision can lead to several years of maintaining debt. So
that will do it for the personal finance tip of
(03:41):
the week. Until next time, I am David
Bootoo. Hello everyone, I am David and you were listening
to the Personal Finance Tip of the Week, and this
week's topic is can you afford to live in your home?
Seeing that seventy five percent of Americans live paycheck to
paycheck and can't afford to retire at the age of
(00:23):
sixty five, this means they cannot afford their homes. Now,
you may be thinking that's not right. Many people stay
in their homes without missing payments throughout their lives. Now
this may be true, However, when you look at it holistically,
a very different viewpoint emerges. So let's discuss. According to AP,
(00:45):
the average price of a home is four hundred and
fourteen thousand dollars at the time of this recording. Now,
with this scenario, Hurdwalla says, the average down payment is
nine percent, so this would come to thirty seven two
hundred and sixty dollars, leaving a mortgage of about three
hundred and seventy six thousand dollars. Okay, so let's get
(01:06):
into closing costs. They are between two and five percent,
and if we take the two percent, now the mortgage
is at three hundred and eighty four thousand dollars and
use the average interest rate of seven percent, and the
payment comes to twenty eight seventy four. Okay, so you're
thinking to yourself, two eight hundred and seventy four dollars.
Is that doable? Eighty so, but now we need to
(01:28):
factor in the other costs. First of all, taxes average
two hundred and seventy one dollars a month. PMI or
private mortgage insurance at one percent is three hundred and
twenty dollars a month, and homeowners' insurance is estimated at
two hundred dollars per month. But keep in mind these
are just averages and based on where you live, costs
(01:50):
can be much higher. Okay, so let's add this up.
This means the total payment scenario is about thirty seven
thousand dollars down with a three thousand, six hundred and
sixty five dollars payment each month. So the question is
can you handle that? Now, keep in mind, this is
just a starter home which will no doubt need improvements
(02:13):
before long or upfront. So this brings us to the
rules that you must follow. Number One, you need an
emergency fund of three to six months in the event
that you cannot work. Number two, you need a rainy
day fund to pay for unforeseen maintenance. Number three you
cannot have credit card interest. And number four you should
(02:37):
be investing ten to fifteen percent of your gross income
for retirement. If you cannot meet this criteria, this simply
means that you cannot afford the home. And why you say,
because eventually you will run into a situation well, you'll
need additional money that you don't have, and what this
leads to is additional borrowing, and then this leads you
(02:59):
down a giant rabbit hole. Now for the last thing,
if you currently own a home and you don't meet
this criteria, consider making a change so that you can
effectively plan for your future. When it comes to your retirement,
it's not timing the market, it's time in the market.
For the most part, the odds are that you'll be
(03:19):
kicking the can down the road and you'll be working
the rest of your life, or you will not be
able to do the things in your golden ears that
you'd like to. So when it comes to the home
ownership process or home buying, make sure to be patient,
especially in times of high interest rates, as the wrong
decision can lead to several years of maintaining debt. So
that will do it for the personal finance tip of
(03:41):
the week. Until next time, I am David
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.
The Clay Travis and Buck Sexton Show
The Clay Travis and Buck Sexton Show. Clay Travis and Buck Sexton tackle the biggest stories in news, politics and current events with intelligence and humor. From the border crisis, to the madness of cancel culture and far-left missteps, Clay and Buck guide listeners through the latest headlines and hot topics with fun and entertaining conversations and opinions.