When you start earning an income of your own, one of the goals in mind might be to buy your own house. This isn’t surprising; after all, everyone wants to be sure of a roof over their heads. Paying rent can take a huge chunk out of your paycheck; plus, you can’t make modifications at will when you don’t own the place.
Many social media influencers also talk a lot about buying their own house, aiming for that goal with all the money they earn. Watching all the home tours and decor ideas online can tempt us even more; plus, there are all those benefits to consider, right?
As it turns out, there are actually several reasons why you shouldn't really be thinking about buying a house.
Surprised to hear this?
Read on to find out why you might want to hold back before signing any papers:
Why You Should Never Buy a House
First of all, it’s important to understand that owning your home has several advantages. You’re able to capitalize on it by getting tax savings and by building equity. You can also get the furniture you like instead of relying on someone else’s choice. When it comes to interior decor, you can paint the walls, change the doors, and drive in all the nails you want without losing any deposits.
There’s also no need to take permission from anyone before conducting any major home improvement projects. Plus, if your family is growing, you can buy accordingly so that there’s enough room. What’s more, it’s a bit of property that you can even rent out for more income.
With so many potential advantages, why would everyone not want to own a house? The answer is logical. But not everyone might want to hear it. Basically, owning a home is not for every single person.
Think about it; you’re sinking a major part of your hard-earned savings, probably also putting yourself into debt, to get a piece of property that will tie you down. You’re also responsible for all of it. Besides, the risks involved could mean you end up losing money.
So, before you go on to open houses and tours, or even begin dreaming of a home in your ownership, start crunching numbers. Evaluate the situation and make some estimates. You can also look up experts such as mortgage lenders, real estate agents, or even current homeowners. Talk to them and see what plans you have to make well in advance.
Also, take a look at the reasons why buying a house might not be the best decision for some time yet. You just might conclude that such a step might be just too uncertain. Let’s have a look at the top five reasons now:
1. You’ll be Committing to Stay in One Place
Be honest with yourself and consider the future you have in mind. Are you at the place you want to be in your life? Keep in mind that having a house in one place will mean that you’ll be spending most of the next few years in that place. If you still want to be flexible, are traveling to new places, or are considering living somewhere else, buying a house isn’t for you.
When you’re renting a house or apartment, you might be bound by a lease. However, leases can be quite short, usually only up to 12 months. Once this expires, you can pack up and move on to another location without losing much. In fact, this might be your next short-term goal; you can earn enough to move to a better, more upscale place in a year or so.
If you’re already living in your own house, however, you’re probably there for the long run. Even if you can afford to move to a better location, it can take years to make that decision and manage all the arrangements.
Costs of putting up your house for sale
You first have to pay for listing your house, then hire a real estate agent, and start staging your home. Staging a home right can cost more money and will definitely require a lot of effort. Add in the convenience and risk involved in letting strangers in to view your home, and it might not be worth it.
Plus, selling shortly after you buy is a pretty costly deal in itself. You probably won’t recoup your closing costs nor would you have enough equity yet to offset those selling costs.
Job security is another issue to consider here. Even if you have enough money to buy that house, is your income going to be steady for the next five or ten years? Many homeowners end up losing their jobs in that area and have to go into foreclosure. When you’re renting and can’t afford the place anymore, all you usually have to do is vacate the area. There are usually no major additional costs involved; look for a cheaper place to live and move out.
2. You Can Save Half the Money by Renting
At a glance, it might seem like paying rent is just gnawing away at your pocket. You’re paying to live on someone else’s property. You have to live with the decor and sometimes even the furniture that someone else chose. Any improvements or upgrades you make to the place have to be portable and temporary. So, you’re losing money again.
This kind of reasoning might seem logical but you should also look at the facts. If your aim is just to have some shelter, then it makes absolute sense to pay for that necessity. After all, we’re paying for the food we eat and digest every single day, the water we flush, and the electricity we consume.
Comparing rental rates with mortgage payments
When we look at the rental rate in certain real estate markets in the United States, some of them are up to 50 percent lower than your average mortgage payment. Single people or couples might be able to skip the mortgage by searching for used mobile homes for sale. However, what happens when you have a whole family to accommodate?
When home prices are really high, it’s more affordable in the long run to rent a decent-sized home. Of course, the calculation is not easy, as property taxes and home mortgage interest are both tax deductibles. The interest payments are a major concern when a loan is still fresh. So, you’ll have to sit down and consider all the monetary factors to decide what’s most affordable.
3. You Have to Do a Lot of Homework
The hard fact is that having ownership of a house requires a lot of research. You have to start right at the very beginning, looking up manufactured homes for sale as well as more conventional housing options.
At every step, you need a certain level of buyer and owner smarts. Not everyone has these instincts, and some may never develop them. If you ask a real estate attorney, they’ll probably tell you that this lack of knowledge might make you suffer irreparable losses when you can least afford them.
Know what you’re doing
Before you set about buying a home, take time to know about the working of real estate. This includes knowledge about how to look for the right properties within the relevant locations.
It also means that you have to learn certain skills for maintaining and managing your home. Basic DIY skills will certainly come in handy, along with working out and sticking to a budget every month. You’ll have to be mature and get the know-how of how to deal with property issues.
If you're ready to gain the required knowledge, take a course in real estate or read some reliable books on home ownership. You can also consult realtors to see what home owning entails.
When you do set out to buy a home, you should know the market as well. Study the comparable sales for the past year at least, get familiar with costs, and hone your negotiation skills as well.
4. There Might Be Financial Risks
If you’ve consulted any experts on home buying and real estate so far, they might tell you that buying your own house might not be a good investment just now.
In fact, the historical record of residential real estate as an investment isn’t really good overall. When you own a home, you have to pay the costly maintenance bills. If the home is not considered stylish or trendy anymore, it will depreciate over time. In fact, its value is likely to go down due to a number of unavoidable factors; a nearby natural disaster, rising crime rates in the neighborhood, etc.
What many folks may not realize is that in the century between 1890 and 1990, the inflation-adjusted appreciation for housing in the United States was almost zero. This was because the labor and construction costs are going down.
You lose out on other opportunities
Additionally, when you sink most of your money in a home, you lose out on other potentially lucrative investment opportunities. You could have put that cash in stocks and bonds, earning a nice passive income without the financial input.
In fact, history has shown us that a diversified stock portfolio has outstripped the investment performance of residential real estate by a significant amount.
Finally, consider the risk of your home’s market value dropping. If you buy a home now and pay 20 percent as the down payment, you can lose out from the local market drops by only 5 percent. This way, you lose out on a quarter of the investment without gaining much.
5. It Involves a Lot of Grunt Work
When something breaks down in a rented place, you can either let it be (if you plan to move soon) or call the landlord to repair it. Some leases might specify that you have to do the repairs yourself. But at least, you have the option to refuse before signing.
In your own home, however, you’ll have to put in elbow grease to fix things yourself or pay up to hire handymen for the job. While you can technically put off the project, this will result in more expense later on as well as a lower property value.
Just a few examples of these tasks include cleaning the gutters, plastering, caulking, painting, repairing machinery, and much more.
The Takeaway
While the points above are relevant, especially in the uncertain world we live in today, they’re not the end of the discussion. Look at all the factors in question, ponder upon your conversations with experts, and then, consider your situation. You just might conclude that buying your home is the best decision for your future!
For now, it’s probably best to tread carefully. You don’t know what the future holds. So, wait until things look a bit stable. At the end of the day, actually living your life instead of slaving away to buy and maintain a house might be the better deal. Think carefully about any buying decision now, and you’ll hopefully be more secure further on.