Ramit Sethi breaks down why buying a house doesn't guarantee profit. A $400,000 home costs over $1 million total when you add interest, taxes, maintenance, insurance, and closing fees. Even if the price doubles, you can still lose money.
If you want to get stuck making one of the worst financial decisions of your life, I want you to buy a house this way. Get the most expensive monthly payment you can afford. By the way, when it comes to how much you can afford, don't run the numbers yourself. Just trust a mortgage broker. They're the ones who really are looking out for you. Then wait for prices to go up and then sell and pocket the profit. That's simple, right? That's how it works in America. Not so fast. Buying this way often loses you money, even when you sell a house for more than you bought it for originally. If you buy a house for $400,000 over 30 years, you're not just going to pay $400,000. By the end of your payments, you end up paying nearly twice that original amount. That's another $400,000 on top of the original purchase price, thanks to interest. And there's more. You'll also pay property taxes, maintenance and repairs, homeowners insurance, closing costs. Add those in and your $400,000 house will cost over $1 million by the time you're done. You could sell that house for twice what you bought it for and still lose money.
