Homeownership is not overrated as the experts are now all agreeing to on 24/7 media. Homeownership is a good thing, but it is not for everybody. It is a good thing for people that want to own and care for the place where they live, but must be done in moderation- as with anything.

It shocks me to see the same media people that were pushing Americans to buy McMansions not five years ago are now telling people they should not buy a home at all. A home should be neither a drain nor a depreciating asset, it is a place to live and work and play. It should be a safe haven not a ball a chain. 

With cover stories about 220 million dollar apartments in London and 25 million dollar landlocked properties in the Hamptons, I can see why even a regular Joe wants to own a house. I can also see why a regular Joe would want a big house, if some undisclosed rich guy can buy an apartment with a panic room and some tech kid can buy a lot with no driveway for 25 mil! Who wouldn’t want to say they own a piece of the rock!! But alas, too much beer gives a fat belly, too many doughnuts give a fat ass and too much house gives an empty wallet. Here are five things to consider when buying a home:

1. If you cannot afford a house, don’t buy one. Even if some guy says he can you a great deal on a foreclosure and even if your Uncle Joe said he will lend you the down payment. If you do not have any money to put in the deal, then you cannot afford it!

2. Consider your future state of living before buying a house. In other words, will things change that will make you regret you bought this house? Are you teetering on losing your job, quitting your job, transferring to the other coast or getting a divorce? These things will change your life and your finances. If you can afford it now, but know income or circumstance will change your plan, then don’t buy a house now- wait and see.

3. Are you buying a house because you think you need a tax write-off? That is plain silly and sounds dumb at cocktail parties. The United States is one of the few countries that allow a tax deduction for interest paid on mortgages. I have had plenty of people think that they need to buy a house so they can take that deduction, because rent is not deductible. If your tax advisor advises you to buy a house because you make too much money, get another tax advisor.

4. Buy a smaller house.Here bigger was always better, but not anymore. Houses should be smaller and scaled down not bigger to hold your 56 inch flat panel. If the mortgage lender pre-approves you to borrow $400,000, cut 25% off of that. Buy below your means and borrow less than you can afford. It will make you much better off in those lean years. …..and buy less stuff- you don’t need anyway.

5. Consider the increase in cost of living and housing expenses in the future when calculating your monthly payment now. For five years I subscribed to the Saturday edition of the Financial Times and it cost me 52 bucks. I thought it was well worth it. Today, upon renewal 104 dollars a year, that is double. My health insurance went up 25% over last year and the gas and electric have certainly doubled over the past ten years. Consider this and calculate an extra 10% of housing expense each year. If you can afford it now, can you afford in five years? If you are squeezing, buy a smaller house or keep renting.

Homeownership is still a good thing; the greed of yester-years is now hitting us. Real estate is a good investment; it just needs to be a wise investment. Maybe the builders will learn from this and build smaller, greener houses. Maybe the lenders will learn from this and continue to lend out less than people can afford Maybe the Realtors will learn from this and show first time homebuyers only things are within their means. Maybe homebuyers will really think about what it is to own and care for a home and decide if they really want one before buying one.

Perhaps the magazines that are now writing cover stories on how homeownership is overrated should check their files to see how many cover stories they ran in the early 2000’s that praised ownership as the American Dream and instructed all people to run and buy a home. A home is first a house, second an investment. Invest wisely and live in your home.