Chapter 3

Choose Your FOB Wisely

Let’s face it, as Americans, we love our homes. Home ownership is considered by many to be the greatest American dream, and for the majority of us our home is our single largest asset. Our home is where we watch our children grow up, where we share time with family and friends, and it is the focal point of so many of our fondest moments. So it’s no surprise that we have a tendency to want the largest, nicest home that the bank tells us that we can afford. Unfortunately, the economy’s downturn has made the dream of homeownership a burden for many people. Foreclosures hit record highs in many states from 2008 to 2012, and many families were faced with the decision of whether to give up their home in the face of economic stress. As a Combat Finance reader, I want to help you step into a home that is right for you and your family, one that not only provides the benefits of safety, security, and personal enjoyment, but one that is also financially strong and defendable in difficult times. The purpose of this chapter is to provide you with a detailed framework for determining how much house you can actually afford. (Spoiler alert: It’s less than what the lender tells you.) To accomplish this we will not only discuss some simple formulas that you can use to determine the maximum price and payment you should accept for your budget, but we will also spend some time talking about the hidden costs of owning a home. My desired end state is that you have a detailed ...

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