Warning Signs a House May Be a Money Pit
Some houses are in such bad shape that just making them fit to live in would cost far more than their actual purchase price. These so-called “money pits” can swallow up all your spare cash and never be satisfied.
: something that uses up a very large amount of money My house is such a money pit—I'm always paying for repairs on it!
Homeownership devours your liquid money.
Each month, you're going to be spending more money if you own a home versus renting a place for roughly the same monthly payment. However, that investment is, on average, recouped by the increase in value of the home. In fact, over the long haul, it's more than recouped.
Most lenders aren't going to finance a fixer-upper with a traditional mortgage. After all, they aren't going to approve a loan for more than the home's current value.
If you're talking about a fixer-upper with pretty major renovation costs, you're going to have to spend at least 10 percent of the home's value, or around $30,000. And that's before you start talking about the brand new kitchen.”
If you bought a house with major issues, don't worry. You may have legal recourse for any financial damage if the repairs needed were undisclosed or if your inspector missed them. Even if you don't have a legal case, you can still turn around and sell your house for cash.
5 Proven Ways to Increase Home Value
If you're a homeowner, chances are you're worth much more than someone who rents, according to the Federal Reserve's 2020 Survey of Consumer Finances. Homeowners have a net worth that is more than 40 times greater than their renter counterparts, which reinforces the idea that owning a home is a smart financial move.
So What Exactly is the 'Money Pit'?
According to island lore, it first drew the attention of a local teenager in 1795, who noticed an indentation in the ground and, with some friends, started to dig—only to find a man-made shaft featuring wooden platforms every 10 feet down to the 90-foot level of depth.
What is another word for money pit?
| cash drain | financial burden |
|---|---|
| leech | money sinkhole |
| bottomless pit | bum |
| freeloader | sponge |
A money pit: something that costs a lot of money over time (more money than was first expected).
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