Should we buy a house?

Hey Leo,

I have a question for you. My husband and I just got married last year and found out last week that we are expecting a baby. He has a daughter and I have a son so this will be our first together, and we are very excited.

However, we are currently renting a small two-bedroom twinplex and would very much like to buy our own house and have a nursery for the new baby. Our credit scores aren't great and we wanted to get a consolidation loan to pay off all our debt since we are only paying minimum payments at outrageous interest rates right now and getting nowhere fast.

The banks have turned us down for this loan for our credit being so bad. Any suggestions on where we can turn? The whole point in us getting this loan is to help boost up our credit scores, but no one seems to care about that.

"Drowning in Debt"

Dear Drowning:

Congratulations on the new baby.

Sit down and write those banks who turned you down a thank-you note. You signed yourself "Drowning in Debt", and you think a mortgage will improve that? A mortage AND a new baby?

Debt consolidation loans do not PAY OFF YOUR DEBTS, they simply move it around. Be a minute late with a payment and your rate will probably go up.

Robert Kiyosaki, author of Rich Dad, Poor Dad, calls a single family home the single worst investment a family can make. Why? Among other reasons because of the upkeep.

Now, as a renter,  you can call the landlord. If the roof leaks in your own home, you are responsible for fixing it and paying for it.

I'm hoping some of my readers will leave comments on their own horror stories, thinking their own home was going to solve all their problems. I know those stories are out there because I hear them all the time.

I promise you, without a dramatic increase in your income and proper money management that house will, in short time, be an anchor around your neck. My advice to you is to hunker down where you are or find a bigger place to rent for the price you are paying now.

Don't spend your time and energy looking for more loans or buying a house with "no money down". Work on increasing your income. Your credit will improve as you pay your bills
on time.

I don't mean to sound harsh but I'm hoping to impress upon you that a new house AND a new baby are probably too much to take on based on what you've told me.

Good luck!

Leave a Reply

Your email address will not be published. Required fields are marked *