By David Reynolds
“Prepare thy work without, and make it fit for thyself in the field; and afterward build thy house.” Proverbs 24:27
Son, desire a home – not a house. You can buy a nice building and it can be empty. A home has a homemaker – a home has little children running around. Don’t send your wife to work outside the home just to get a house or a car. Wives, be content with what you have.
It is right and natural, however, for every young couple to desire a place of their own. Property is the best in-vestment that any young couple can make that will build and hold its value. Most young families cannot buy their first home because they are car poor. Cars depreciate, but property appreciates. Buy cheap (but running) cars so that you can invest in a starter’ home.
You can have your own `home’ if you will follow my advice and are willing to sacrifice for it. First, you must be willing to wait – wait until you have saved enough for a small down payment.
Remember, I recommend the 10-10-10-70 plan. You pay to God His 10% tithe, then you invest 10% for the future and you save 10% for the unexpected. You never touch either one of those funds unless there is an emergency. You may use your savings to buy a car – but never your investment. A home is an investment.
Once you have a small nest egg put away, begin to look for a small place that you can buy with this down payment. Look for a ‘fixer-upper’ – a place that may be neglected but has a good foundation and a good roof. Look under the floor and up in the attic for dry rot. This is more important than what the house looks like – for with tender loving care and a little paint you can make it pretty and neat with very little money and much work.
The payments must never be more than 30% of your take-home pay. (This 30% must come out of the 70% that you live on.) When you borrow, make sure the mortgage preferably is for 15 years. If you sign for 25 years, it will lower the payments but you will be paying much more in interest over the life of the contract. Never accept a variable rate of interest if at all possible. Never, never sign for a `balloon’ payment that will come due in five years!
Remember you now will have the added expense of property insurance and property taxes. The lending institutions will allow you a bigger house with bigger payments, but all that will do is put you back under financial bondage.
As you are looking for your first home, look for a location near to your place of employment and close to your church. Keeping your family in church must be your top priority. Transportation is a large family expense, so consider it as you make your choice.
If you are a wise steward you will fix and clean up this little ‘starter’ house so that it will increase in value. Plan to live in it at least 5 years. If God has blessed you with more children, then you may need more space. If the house is in a good location and the homes around you are well kept, you may decide to build on an addition. If not, then put the house up for sale and use the equity to buy a slightly bigger house in a better location. Slowly over the years you build a small estate.
Remember, there will come a time in your life when the kids leave, that the house will be bigger than you need and you will think about downsizing. In my experience, most couples who have put together a `nest egg’ for retirement do so primarily from the equity from their home.
“There is treasure to be desired and oil in the dwelling of the wise; but the foolish man spendeth it up” Proverbs 21:20
Son, you will find that financial freedom comes, just as spiritual freedom, by commitment and discipline to a cause. We deny ourselves in the present in order to obtain a reward in the future.