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Financing a Home

Let’s imagine that you start a business—we’ll call it a dry-cleaning business—and all of a sudden the business takes off and you decide it’s time to move on up to, say, a deluxe apartment in the sky. This represents the chance to live in a nice home and make new friends. Compelling, right? However, this new apartment comes with a hefty price tag and deciding how to finance it will become a major challenge, along with managing your soon-to-be neighbors.

In Chapter 2, we introduced the concept of a liability and what it means in terms of your personal balance sheet. One of the most important liabilities and one that you will very ...

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