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HOME SWEET HOME: THE REALITY COST OF BUYING A HOUSE When you have enough saving after a few

years of working, what would be flowing in mind that you would like? The answer is a house. Why buying a house? Because by owning a house, you can have security, peace of m ind, is a place where you can call a home, where you can lay your heart and rest your mind. It will become a place where you will be raising your family, a res pite from work and a shelter. After our children grown up, it will become a plac e of priceless memories intact and solace. It’s an outward reflection of who we ar e, where we are in our lives and our inspiration. But, there is something you must know:1. Your home is part of the market which is not under your control: the thi ng we can control is how much risk we put into owning it; how much we can borrow , at what interest rate, how long we can live there and how much money we have p ut into it. In reality, the bank own your home and you are paying each month to own the right to your home. If you couldn’t afford to pay, you will lose your home . 2. Your home has more value than as a market investment: not to mention the security, stability, legacy and roof over your head, there is the possibly of n egative personal cost such as bad memories, tie to be ex-spouse etc. What are the real cost of owning a home? Not to name a few: downpayment, deposit money, loan fees, insurance, rate and as sessment, appraisal fees, document preparation fees, tax services fee, notary, property taxes, maintenance fee, renovation, repair and maintenance etc. What influences the value of your home? 1. Overall economy 2. National and local unemployment 3. National and local materials/construction costs 4. National and local fuel costs 5. Your neighbors, town and municipality 6. Your school district 7. Demographic changes 8. Care and upkeep Do you think of the risk of owning a home? 1. Mortgage: it is very expensive no matter what type of mortgage you are t aking up. The simplest calculation of mortgage is that you apply the term of th e mortgage, usually thirty years with 10 or 20 percent of downpayment and fixed interest every year. Did you ever think of the risk and long term costs vs. bene fits of of buying a home? How long did you plan to live there in order to gain a s much value/equity as possible? Can you make your mortgage on time so that you can keep your credit and home in good standing? You can set to get a return of 5 -7% as long as you stayed in home more than 5 years. 2. Downpayment: it determine the % of interest you can get along with your credit history, how much house you own and the difference of being able to sell or not. 3. Your financial future: getting a thirty years mortgage is a long term bu rden for you. Anythings can happen during these periods of time, your health, ac cidents, raising of interest rate, decreasing house value, unemployment. If the combined costs of your mortgage, taxes, insurance and maintenance getting above 30% of your monthly take home income, you get into dangerous territory. Owning a home: it is worthwhile?

The real cost of homeowning can make sense if you can answer yes to the followin g question:Do you plan to staying put for at least five years? Do you have a measure of job security? Do you have six to eight months of living expenses saved up outside your down pa yment? Do you have at least 10% to put down? And if not, if you put down less, are you willing to stay in the home longer to build up your equity? Is homeownership important to you both personality and financially, as a way to build net worth and family legacy? There are great reason to buy if market is priced low, tax credits, low mortgage rates and tax deductions. However, it’s not a buyer’s market for you if you can’t buy right! Decide what you value in terms of your value in terms of your lifestyle as well as your means. Cost of owning a home Personal cost of owning a home Extensive cash saving for downpayment or risky loan to replace cash savings Inability to move into another home Long and large debt obligation/contract Time loss and physical strain of mainten ance and repairs Property taxes Distress due to unexpected maintenance/repairs Maintenance Risk to quality life due to financial constraints Lost income hours due to maintenance Personal burden of hefty financial respo nsibility Long term: possible rate of return Effects costs, such as longer and more expensive commute Benefits of owning a home Personal benefits of owning a home Possible solid return on investment Shelter Possible tax deductions Sense of security Hedge against more risky investments over the long term Sense of community Can build a networth/wealth Symbol of success Freedom to alter the space with construction/remodeling to suit changing needs/likes Place to build memories, history, forge identity Cost of renting Personal cost of renting Possible loss of potential long term gains from owning Inability to change/alte r surroundings substantially Rents can be higher than mortgages for the same space/area At mercy of land lord contract/relationship Risk of owner breaking contract/foreclosing, resulting in sudden search for and more into new home Possible effect on sense of place and community, even ac complishment Benefits in renting Personal benefits in renting Ability to move easily and cheaply Able to move freely Lower initial costs than downpayment for homeowner Not responsible to stres s and time related to maintenance Little or no maintenance at all Lower rents free up funds for other investments plans In some cases, some of the owners would choose to default on their mortgage paym ents because the home they own is not worth more than the mortgage. Therefore, w hy paying expensively to own a home?

Cost of losing a home/walk away Personal cost of losing a home/walk away Devastated credit record/scores Feeling of failure Possible legal repercussions Distress over relocation Inability to borrow at competitive rates for three to five years Distress of foreclosure/bank/legal proceedings Possible government/bank repercussions Family/loved ones affected by the loss/m ove Contributing to lower home values of neighbours and national foreclosure burden Social stigma Possible effect on job search if credit is reviewed before hiring Guilt ov er neighborhood repercussions and breaking contract Benefits of losing a home/walk away Personal benefits of losing a home/walk away Frees up finance for other needs Lessen stress of maintaining a possibly unmanageable financial obligation or stress of a deeply negative return on what’s perceived to be a personal/financial benefit Frees up finance to invest in possible better return Freedom and ability to s tart over Ability to rebuild credit and borrow or own again in two to ten years What is the cost of marriage and divorce? With the raising price and inflation nowadays, it is hard to imagine that the c ost of the marriage would now come across RM20,000. In the old time, the soon to be bride would be traded for a cow, land or simple dowries. Imagine how much RM 20,000 can do for you if you happen to put them in bank. With the earning intere st of 2% per annum, you can get RM400 per year. In Malaysia, most parents are st ill sponsoring their children wedding and maybe you and your partners will have to be bow to have a space seats for your relatives or parents’ friends which you n ever seen before. Married people tend to have respects in the society than those who don’t. It’s the c ustom of the society. That’s why government, NGO and authority would give so many benefits to them in so many ways. Cost of getting married Personal cost of getting married Potentially enormous wedding expenses, including ceremony, reception, license et c Cost of making commitment Legal change of status and all government documents such as passport Change o f role in relationship New family and friends who may cause stress Benefits of getting married Personal cost of getting married Legal rights Companionship and care for life Medical rights Children/nuclear family Estate and tax breaks/rights Change in societal status Access to employer benefits such as 60 days maternity leave Feeling of secur ity and stability Insurance discounts Possible health benefits such as healthier life Other spending discounts New family and friends What is the real cost of divorce? When we talk about marriage, do we have to talk about divorce? The rate of divor ce is increasing rapidly with about 40% opt for divorce after ten years of marri age. The levels of pains, reliefs, presence of children, length of marriage, the quality of marriage and the costs of divorce is all personal matters.

What lessens your chance of getting a divorce? Make over $50,000 a year Have a child after you get married Be older than 25 Have parents who never divorced However, not every divorce will financially destroy you if you know the complica tion of your financial life, what both of you can agree on and the state of your paperwork in. Keep in mind the following:Debts: who will be responsible for the loans incurred before and within the marr iage as well as credit cards? Insurance: perhaps, you and your couple did take up an insurance coverage for yo u or both of you, like health insurance, medical insurance or car insurance. Whe n both of you in divorce, who are going to pay for the bill? Estate plans and beneficiaries: change your will and trust to reflect your new f amily structure, change the beneficiaries of insurance so that your ex would not even get an inch of it. This does not prevent him or her from doing so. Think a bout it! Assets: some of the married couple would put down the name of the couple when ho use, car or assets are bought. When divorce is a sure thing, how two of you goin g to get over it? Taxes: you may be filling your tax income jointly. What about now? And when the assets are separately divided, what about the real property gain tax? Surprises expenses: don’t underestimate the cost of divorce. Picking up children f rom school, finding a new home, transportation, and insurance, daily expenses wi ll now coming from you solely. Think about whether you can afford it or not? Cost of divorce Personal cost of divorce Legal proceedings Distress over legal proceedings Sale and split of assets/property such as homes, retirement accounts Distress over loss of property Loss of marital benefits Potential feeling of failure Loss of full joint income Distress over relocation or custody agreements Loss of possible tax advantage Change in marital status/society status-stigma Possible of relocation costs Potential loss of in-law family contact or forme rly mutual friend Benefits of divorce Personal benefits of divorce Future gains from potential freedom to pursue other professional/career interest Freedom from a possibly untenable, distressful household situation/relationship Freedom from a possibly damaging relationship to/for children involved Freedom to seek alternate mate/partner Possible improved stress levels, physical health and happiness over time The real cost of raising a family In Malaysia, average family would have to spend about RM3,000 for a household. T hose with income below RM3,000 would consider as low income group. Think again, each household will have transportation to go to work. Each household either loa n their house or paying rent each month. If you have children or old parents to take care of, daily expenses, monthly expenses, medical care etc, how much RM3,0 00 can take you to? Childcare will cost RM10,000 per year for full time care. If your old parents are staying with you, you can save up half of them. If you are full time mother, you can save even more. However, the burden on your partner w ill increase. With the unsecure job he has, can you sit comfortably at home with your crying baby and old parents? There is a cost. If you and your partner woul d like to go separate ways, as a single mother taking of children, would getting

a job put you through your hardship? Streamline your manager role to help lower the personal and financial costs of r unning a household with kids:Treat it like a job: take emotions out of your brains and stick to the plan. Sti ck to your household budget and shop like a CEO/Accountant. Automate your bill paying, savings, and contribute to retirement or college fund s. Merge family calendars Communicate with your partners and children Cost of not working full time after birth of child Personal cost of not wor king full time after birth of child Lost wages/income Adjustment to new role/status Possible loss of some employer benefits Loss of daily contact with colleagues Possible wage penalty Loss of face time with higher-ups Anxiety over lost time at the office Possible distress/concern over household finances/loss of income Benefits of not working full time after the birth of child Personal benefit s of not working full time after birth of a child Save substantially on childcare costs Ability to be fully engaged and involv ed in child rearing and household management Save on transportation/commuting costs More control over family plan/child rear ing Possible freedom to explore new, more lucrative career opportunities Possibly lower stress than if juggling work and home Ability to find alternative income streams via part time work or working from ho me Ability to maintain or grow more personal relationship or friendships Cost of working full time after the birth of your child Personal cost of working full time after birth of child Childcare cost Distress over not being at home with child Possible higher transportation costs for commute Additional demands on ti me may mean even less time for sleep or personal sleep Purchasing work attire Time constraints can lead to limited or less time for pe rsonal relationship or friends Benefits of working full time after birth of a child Personal benefits of wor king full time after birth of a child Additional income for household finances, retirement planning, emergencies and d iscretionary income Personal fulfillment, ability to continue career goals Lessened to no wage penalty Maintenance and building of extended network of colleagues Ability to stay on track to increase pay over time/get promotions/build a busine ss Lessened anxiety over family finances What make you think of education? It helps to make better decision about health, marriage and parenting Improves patience, make people more goal orientated and less likely to engage in risky behavior Improve trust and social interaction and offer substantial consumption value The return on investment in education is similar to return on stocks. However, t he effect is from students itself. It was your own drive; your own smarts, that led you to where you are. The only thing you need to do is to build yourself up as a person, build character, figure out who you are, and what you are passionat

e about. School is a formality. It’s not the degree. It is who you are and what yo u do with it.