Choosing Your Home

Choosing Your Home
Choosing Your Home — Funding the "American dream"


Funding the "American dream"

Owning a home has long been the American dream. For many, it represents success and security. A recent survey found that 73 percent of renters say that owning a home is one of their goals. A whopping 95 percent of current homeowners are happy they took on their home mortgage.1 Apparently, the dream is alive. Here are a few financial considerations as you pursue different aspects of your housing dreams.

Keep contributing to your retirement plan even while saving for a house.

Becoming a homeowner

For most people, buying a house ranks right up there on the financial commitment scale next to saving for retirement. So how are you going to pay for it?

First, figure out how much house you can afford. If you’re already functioning within a household budget calculate home expense estimates—down payment, mortgage payments, insurance, utilities, maintenance and taxes, to name a few. Remember to think about how your income might grow over the years. Run the numbers on several different home price points and mortgage payments to get a feel for what you can afford. Generally, your monthly mortgage payment, including principal, interest, property taxes and homeowners insurance, should not exceed 28 percent of your gross monthly income.2

Many people save to buy a house for three to 10 years before purchasing. You can set up a separate savings account and gradually build up enough for a down payment. Just don’t stop contributing to your retirement plan, particularly if your employer’s plan provides matching contributions. First save for your retirement, then save for your house.

Moving up in the world

When it’s time to buy a bigger home or you need to move, repeat the budgeting and planning process. Hopefully
you’ll have proceeds from the sale of your first home to help fund the next one.

Buying a home may be achievable, as long as you can manage the expenses of two homes. You might be able to
rent out the second home to help offset some of the added costs and possibly bring in some income. A vacation
home could provide some fun and flexibility for weekend family getaways. With careful planning, buying your future
retirement home today could allow you to build added home equity to help with future income needs.

Downsizing the dream

Once your kids are off pursuing their own dreams, you may choose to rethink your housing needs. If you’re an
empty nester, you may want to downsize. Some considerations to keep in mind include:

  • Location — Do you want a climate change? How close do you want to live to family and friends?
  • Size and effort — Do you want to lower expenses and reduce maintenance chores? Would you be happier in
    a smaller home or maybe a condo or townhome?
  • Home value — Will you get the best value if you sell your present home now or would it be better to wait? Will
    your new smaller home have an opportunity to increase in value and possibly give you some retirement
    income flexibility?

Plan with us

Planning and paying for a home can affect every part of your financial life. A financial professional can help you set
realistic goals and review your budget to help you find ways to save for your housing dream.


1 Survey conducted May 2011 by Public Opinion Strategies of Alexandria, Va., and Lake Research Partners of Washington,

2 Source:, December 2011.