When you seek out financial advice, one of the first things you are likely to hear is that you should buy a house. While that is certainly good advice for many people, and there are a number of benefits to home ownership, there are some drawbacks as well. Buying a house is not the right choice for everyone, so carefully consider all of your options before picking the right path.
Following are five reasons why it might not be a good idea for you to buy a home at this time.
You May Be Moving
This should be obvious, but it doesn?t make sense to buy a house if you are going to be moving sometime in the near future (within a couple of years). In fact, even if you might move sometime soon, you would be better off to wait on buying a house until you can set down roots. The financial advantages that are available by buying a home don?t start to show up for several years, so purchasing a house only to turn around and quickly sell it is something that won?t be worth your while.
Out Priced by the Market
Simply put, you might not be able to afford a suitable house in the region where you want to live. While you may be able to find several rental options that suit both your needs and your budget, you may not be as lucky when it comes to buying a home. Take some time to review the market conditions near where you wish to live to determine if buying a house is even feasible at this time.
Prefer the Renter?s Lifestyle
Owning a home is fundamentally different than renting. As a renter, you usually just call the landlord when something breaks down. As a home owner, that responsibility falls on you. It will be up to you to either fix the problem yourself, or hire a professional who can do the work for you.
There is more responsibility that goes along with owning a home ? some people enjoy that challenge, while others do not.
Limited Funds for Down Payment
In recent years, the need for a sizable down payment has increased in the mortgage world. Gone are the days of zero-down loans, so you will need to have plenty of cash saved up in order to write that big check when closing comes around.
If you don?t feel comfortable laying out a large portion of your savings in order to make a down payment, you may be better off renting until you are in a position to make the down payment without draining your entire bank account.
You Love Where You Live
If you are currently renting, and you are happy with your accommodations, why make a move? Buying a house is a good financial choice for many people, but that doesn?t mean that it is the only way to be smart with your money. If you are happy with your life as a renter, look for other investment options?to grow your money over the long run.
What are your thoughts on the idea that “everyone” should buy a house? What other instances will buying a house not be a good choice? When did you by your first house?
Additional resource: If you?re looking for an easy way to stay on top of all your finances so as to know whether or not you?re ready to buy a house, check out my favorite tool ? Personal Capital. Completely free, it allows you to track your spending, monitor your bank and investment accounts and watch your net worth grow plus many other tools.?
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Wise Dollar
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Love this! I don’t think buying a house is right for everyone. We sold our house this year and are currently renting because we are moving around and seeing where we want to live.
Thanks Michelle! Yep, there are definitely instances where it’s not right to buy a house. It can cost a lot of money if you make the decision for the wrong reasons.
It’s absolutely true that not everyone should buy a house. (And if they do, don’t forget to budget for repairs in addition to the mortgage!)
If you don’t want the hassle of repairs, keep renting. If you’re not ready to settle down, don’t anchor yourself with a house. You might not be able to rent it out if you leave.
And yes yes yes you’re absolutely right about being priced out of the market. I had at least one reader during the recession that was complaining because she and her husband got a two-bedroom condo and it was underwater. Meanwhile, they needed to move to a 3-bedroom place. In her mind, they “had” to buy when they did because they were about to be priced out of the market. Even so, they could only afford a two-bedroom. I told her that if they were being outpriced by the market, that was a sign that they just should’ve kept renting. (Not to mention that two small kids don’t yet need two separate bedrooms, even if they are a boy and a girl.)