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No. of Recommendations: 4
I like this rule of thumb.

Generally, the question isn't whether to buy (the decision to own is based mostly on non-financial factors), but how to buy in a way that's financially sensible. In retrospect, things DH & I did right:
- bought under the max we qualified for, leaving wiggle room for add'l expenses (children) and occasional loss of income (we've both been laid off, luckily not at the same time)
- bought an average house in a modest neighborhood; and later, a modest house in a better neighborhood. Mainly to stay within our own budget, but when it came time to sell, our houses got snapped up quickly, while bigger, more expensive houses languished.

Thing we did wrong:
- went overboard on renovations. The house did later sell for more than it would've otherwise, but not enough to cover the cost of renovations.
A house is, generally, an appreciating asset. But renovations are like cars: for your own use only, not an investment.

Anyway, after 40+ years of homeownership, we're now renting (long story), and I just did the calculation of how much we could pay to buy, and break even: (12*rent)/0.05
It's nice to have that number, to consider along with other factors.
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