Suze Orman has blunt words on affording a home

Here's how to know if you'e ready to afford a home.

Transcript

00:00You know, the sad thing is a lot of you think, all right, I'm renting a place right now for

00:04$2,000 a month. I find a home that I like and the mortgage is $2,000 a month. And you think,

00:09well, obviously I can afford that. Don't be silly, everybody. $2,000 a month of rent is not the same

00:16as $2,000 of a mortgage. Besides the mortgage payment, you have property taxes, you have

00:21insurance, you have maintenance. You should increase that $2,000 by 40%. And can you afford

00:30$2,800 a month? And you know you can really afford that if for six months before you actually

00:37purchase it, play house. Put that $2,800 every month or $2,000 to your rent and $800 in a money

00:43market fund for at least six months. Do you have enough money to function well? Do you still have

00:50an eight-month emergency fund? Are you great with all of that? Are you totally out of debt?

00:56If so, you can afford a home.