I'm so sick and tired of people trying to tell me they're going to make a huge profit on their house.

So I wanted people to understand how home ownership really works. Firstly, there is no such thing as making a profit on a house UNLESS you flip houses for a living or are a real estate agent. Secondly, if you can barely afford a house or "you'll just figure it out," you can't actually afford a house. Lastly, just to be clear, home ownership is not a nonstop orgasm. I don't know where people are getting this notion that once they have a house it will be non-stop excitement and smooth sailing from there on out. Houses require maintenance all the time, so if you're not putting away 25% more than your paying for your house each month where will that money for maintenance come from? Nowhere. TADA!

When you buy a house you're not actually buying a house; what you're really doing is renting it from the bank until the very last payment you make on it. Even after this last payment you still don't really own it because you must continue to pay taxes on it every year and if you don't it can get taken away from you.

Here is how mortgage payments work: Let's say you have a $250,000 loan for thirty years at a 5% interest rate. You pay interest on what's left of what you owe on the house which makes up approximately 80% of the payments for the first year and goes down very, very slowly over the course of the thirty-year loan. This means that if you have your house for a decade you've only paid about $46,800 in principal (the money that actually goes towards buying the house) and $114,000 in interest (the fee you pay the bank for allowing you to borrow their money) in 33% of the loan's time period (http://www.amortization-calc.com ). Therefore, you have paid tens of thousands of dollars in interest that don't even go into owning your home! If, at this point, you decide to sell your home – let's say, for 20% more than the original value, assuming you can even get that for it - you have actually lost $64,000. Now you have sold the house for a horrible loss: You still owe the bank $203,200, which they will gladly take when you sell the house, you still have to find another place to live, and odds are you thought you could afford a better house with the money you lost (made?). Remember, you still have to PAY to live somewhere, and when you thought you were making money, you actually lost a lot.

One last thing to remember: The bank is basically taking ALL the risk and reaping ALL of the reward. The bank owns that house 100% until you pay every last penny. My advice? Unless you plan on living in that house forever and NOT selling it, then don't buy a house. It is not an investment which you can make money on and only works in your favor if you stay in that same house until retirement and then do not have to worry about paying rent. I personally rent an apartment and everything and I mean EVERYTHING is included in the rent, very thorough landscaping, a very well maintained pool, plowing, a nice gym with all the weights and cardio machines and best of all HASSLE-FREE maintenance. If you can't afford all of the things listed that would apply to you house and any other surprise costs (medical bills, car maintenance, etc.) then you cannot afford a house.

EDIT: The part about saving 25% on top of your mortgage is intended to be only until you have a lump sum sufficient to handle some tough maintenance. I remember spending $10k in one year living with my parents to replace the oil heater, replace the roof (it's a 6 unit condo so it was spread out over the six units), and some other maintenance crap I can't remember.