Buying can make financial sense for some people, and home ownership has been the American dream for many families. This dream vanished for many during the housing market crash of 2008. Since then, home prices have increased, and mortgages have become more available with interest rates that haven’t been seen in decades. However, life has changed for many families, and home ownership may not be a good plan for people who fall into one of the following 8 categories.
- You Might Not Be Able To Stay In a Home for Five Years
Experts say it takes about five years for your investment to earn money, or more importantly, to not decline. The most important factor influencing your decision to buy or rent is how long you believe you will be in the home. Changes in your career path and your personal life should be considered. Make a realistic assessment of your lifestyle preferences. Can the home you buy now fulfill the expectations you have for your life?
- If You Can’t Put 20% Down
A small down payment means higher costs. The interest rate will be higher, and you will be charged a mortgage insurance premium to protect the lender should you default. If you have to sell the home soon after you move in, then you will likely have to pay to sell.
- If You Have Found a Rental Bargain
If you are renting a lovely home at a low rent payment, then you might consider using this time as an opportunity to save money towards a down payment. You will need to weigh all factors including savings in maintenance and the loss of a tax deduction.
- When the Housing Market Is Priced Too High
Carefully consider the price of homes compared to what you can get for the money. A home may be priced too high for your budget, but it may be what the market is selling at.
Equally important is the need to assess your ability to buy a home in this type of market. Know your budget limitations and don’t let someone talk you into purchasing a home that you know you can’t afford. Purchase price is one thing, but taxes and upkeep are a totally different and often expensive part of buying a home.
- If Buying Extends Your Commute
If you need to drive a car to your job, then you need to consider commuting time and costs. Sitting in traffic on a freeway gets old quickly. Gas and car insurance costs increase along with the commute. Free time is valuable time.
- If Your Credit Isn’t Very Good
Your credit score will determine the interest rate you will pay and even your down payment requirement. Think about the impact of a low credit score over the life of the mortgage. You could be paying a lot more money for many years.
- If You Are Not a Person Who Likes To Do Maintenance Chores
There will always be things to do around the home – both inside and outside. The costs of maintenance could be up to 10% of the price of your home each year. You might also have to pay an HOA fee. Some tasks are very foreboding like cleaning gutters and inspecting the roof for leaks.
- If You Are New To the Area
It can take up to a year to get to know a new area well enough to know where to buy a home. Let your brain guide you and not your heart. Be sure of the area you select. Even if you don’t have children, the quality of the schools will be essential for sustaining the resale value.