It seems everything you read about these days in the real estate section of the newspaper or online business websites, is the need to buy a home before the interest rates rise and home prices increase even more. Now that we are entering a seller’s market in many areas, buyers are scrambling trying to get a bargain while they still can. The problem? Buying a home is NOT for everyone. There have been plenty of times on this site why I have discussed the good reasons for buying a home, but there are plenty of reasons why you should not consider a home. Here are the most important:
1. You will live in the home less than 5 years:
Because of the costs you pay out when buying a home, it takes on average, five years to recoup this amount. It simply doesn’t make good financial sense to sell a home before you can get that money back. Obviously, this is true when the market is soft, but if you are transferred frequently with your job, think you may retire and move, or want a bigger home sooner rather than later, you may want to continue to rent until you are certain you will stay in one place for a while.
2. Starting a new business:
If you are thinking about starting your own business, or in the middle of creating one, reconsider buying a home until you are on firm financial ground. The pressures and stress of establishing a new business are great, so why add to that by buying a home especially if your money is tied up?
3. Your budget is extremely limited.
I have had clients come to me looking for a home with little in the way of a down payment or savings and living paycheck to paycheck yet they want to own a home. While most home buyers have a limited budget, owning a home can be very expensive. Don’t forget insurance, higher utility payments, maintenance and those unexpected repairs. It is a good idea for a buyer to have at least three months of living expenses in a savings account because emergencies happen all of the time. If you have trouble making ends meet while renting, there is a good chance it will be more difficult if you own a home. Talk with a mortgage expert if you would like to see where you stand with your financial information.
4. Unstable job.
If you are nervous about the future of your job, think twice about owning a home until your situation is stable.
5. Feeling pressure:
Prospective clients have walked through my door and have little desire to own a home, however, everyone is telling them how important it is to buy now before the market gets too expensive. These clients would rather spend their money and time on vacations or hobbies rather than maintaining a home. My advice? Don’t buy if your heart is not fully committed! This is a true recipe for buyer’s remorse, so only consider becoming a home owner if it’s something you really want.
6. Bad credit:
I would much rather see a person repairing their credit rather than trying to buy a home with bad credit. Why? Because interest on loans are more costly to those with sketchy credit IF a loan is secured. Not only that, buying a home can drain your budget, so it’s better to purchase a home when credit card balances are low. How do you repair bad credit? Start paying down loans, pay on time and change your spending habits. Once this is done, and believe me, it can be, then start looking for a home!
7. Unstable relationships:
If buying a home is a way to improve your marriage or relationship, reconsider! Not too long ago, a couple walked into my office eager to relocate and find a Windsor home. The wife was homesick and wanted to move closer to her family. Her husband, on the other hand, wasn’t excited about this, but wanted to make his marriage work. Two months after moving, the couple separated and later divorced. The house had to be sold immediately as they could not afford it one salary and the husband was moving back to their original town. Buying a home won’t make life easier or better for a couple whose relationship is floundering, only the scenery will change.
While my job is to sell homes, it’s not in anyone’s best interest to buy a home if they simply are not ready. This is a decision that should be carefully planned, not stressful or filled with uncertainty.