Buying a home is an important part of the American dream. Home ownership provides security, a sense of satisfaction, and a pride of ownership. Also, a home purchase can be a sound financial investment. Over the past 40 years, home prices have appreciated at an average of 6 percent per year.

For most Americans, the cost of paying for their home averages nearly $17,000/year. This is the largest category in the average American’s budget. A purchase of housing that is outside of a person’s budget range is one of the most frequent causes of bankruptcy. Professor Marsh recommends that individuals follow a simply formula to ensure that they don’t spend too much of their budget on housing costs. This formula takes the monthly income of the primary breadwinner for the family and subtracts from this number all obligations. The resulting number is then multiplied by 35% to determine the maximum monthly payment that should be paid. The average mortgage payment is currently over $1500 dollars (30 year fixed loan with an APR of about 5%) for a $240,000 home loan. With a median household that barely exceeds $50,000, and monthly debt payments of $2300 on average, it is obvious that most Americans are probably spending too much on their housing. Imagine that a 25 year old couple made decisions that would allow them to save only $2000/year versus the national average housing costs. This decision could be worth over $1.5 million to them at retirement. Use the following tools and articles to see how to save money on a housing purchase. If you are already in a home, see the “mortgage” category under Credit Management Million Dollar Choice Opportunities to see how you too can save.