The American Dream is to own your own home, whether it is a log cabin in Oregon, a farmhouse in Iowa, or a penthouse in Manhattan. Your home is where you eat, sleep, play, love, laugh, and cry. Where you read books, grow tomatoes, and play cards. Where you can be alone or with your family. Where you can be yourself. Your home is the biggest investment that you will ever make and can be the most profitable one, too. Over the years, millions of ordinary hardworking people have prospered simply by owning the home they live in. They didn’t win a lottery or find gold in their backyard. They didn’t inherit a million dollars from a long-lost relative. They simply made monthly mortgage payments instead of rent payments. You can do it, too.
When you are thinking about buying or selling a home, there is a lot to think about. Is now a good time to buy? Should you sell your home and rent while you wait for home prices to fall? Should you buy a new home or a fixer upper? Should you make a larger or smaller downpayment? Should you trade up or downsize? Should you use a real-estate broker or try to do it yourself? Should you choose a fixed rate or an adjustable rate mortgage? A 30-year or 15-year loan? Should you refinance now that interest rates have fallen? Should you pay off your mort-gage early? Should you remodel the kitchen? Is a vacation home worth it? What about a rental property? What can you do when you are retired and barely have enough money to buy food, but live in a home worth hundreds of thousands of dollars?
We wrote this book to help you answer these questions—and many more. We want to help you make smart decisions about your home, so that you can enjoy your home and profit from it, too.
What Is Houseonomics?
We could have called this book Home Economics because a home can be a single-family house, apartment, condominium, duplex—pretty much anything you live in. But the term home economics has traditionally been associated with making biscuits and sewing clothes, and this book is definitely not about cooking and sewing. So we considered House Economics and thought it would be interesting to merge the words into Houseonomics, pronounced house-o-nomics. This book is about houses (and other homes too) and about many of the big financial decisions you make about your home.
This book is not encyclopedic. That would be boring to write and tedious to read. Instead, we put together a collection of useful principles, handy tips, and memorable stories—about things that can really make a difference.
Who’s Looking Out for You?
A lot of people make a profit from other people’s homes: the contractors who build and remodel homes, the real estate agents who bring together buyers and sellers; the bankers who lend money to home buyers; the fund managers who trade mortgages among themselves, the agents who sell homeowner’s insurance. They offer you advice on building, remodeling, buying, selling, financing, refinancing, and insuring a home. But their advice is suspect. Are their recommendations for your benefit or for theirs?
We don’t have any conflicts of interest. We won’t make a dime if you buy a home, remodel your kitchen, or choose a 10-year mortgage. Our goal is to give you useful tools and insights that you can use to make informed decisions.
Our Stories
Financial decisions involve some unfamiliar principles. Even professionals make mistakes. So what can we expect from amateurs who will only buy and sell a few homes in their lifetime? A lot! We wrote this book because we know that anyone can learn to make reasonable financial decisions about homeownership. One way to learn how to make the right financial decisions is to identify ways to do it incorrectly. This book identifies several pitfalls to avoid. Houseonomics includes many stories to show you the typical kinds of housing decisions that people face and how others have dealt with them—sometimes wisely, sometimes foolishly. All our stories are real. The reason we tell these stories is not to embarrass anyone, but to learn from their experiences. Heck, some of these stories are about mistakes that we have made. The names and some unimportant details in the stories are changed to protect the individuals’ identities, and we sometimes combine two stories into one or split one story into two or three. Again, we want to do whatever will be most helpful to you.
