The reality is that home ownership isn’t for everyone. Even if it’s right for you eventually, it might not be right for you right now. There are a few factors that should serve as a warning against taking the leap into homeownership.
Don’t buy a home if…
You aren’t planning to stay
Whether your job situation is a bit uncertain, you’re in a relationship you’re not sure will last, or you’re longing to make a move to another city sometime soon, renting is your best bet. That’s because home values tend to fluctuate throughout the year and from year to year. If you are forced to move out in the near future, you may suffer a loss on the sale of your home. Most experts recommend that unless you can stay put for at least five years, you’re better off renting. It’ll take at least that long to make up the costs associated with a home purchase.
You don’t have a down payment
It’s not a good idea to buy a home without a downpayment. The simplest reason is that foregoing a down payment costs you a lot more over the life of the loan. The more money you borrow to buy your house, the more interest you pay. Having a down payment protects you from going underwater on your loan, or owing more than the house is worth. This can happen when you buy without a down payment and then home values drop.
You aren’t a saver
If you find saving for a down payment challenging, that may be a sign that you aren’t ready to own your own home. When you’re a renter, all you have to worry about is covering your rent. Once you’ve done that, the rest is up to your landlord.
When you own your home, the responsibility is all yours. So, if you get a leaky roof or a broken water pipe, you will have to pay to fix it. If you have a hard time saving, you’ll lack the cash to take care of all the expensive repairs you will face as a homeowner. If you’re already living paycheck to paycheck, the ongoing financial responsibility of owning a home is likely to land you in debt.