The Fairy Tale
We are constantly told throughout our youth that we are to follow a certain path. Grow up, go to college, graduate, get a job, get married, buy a house, have kids, live happily ever after. But we all know this isn’t a linear path and life has a funny way of throwing you curve balls when you least expect it.
Buying a home can be a good thing, but it can also be another shackle that holds you back from pursuing your dreams. Here are three reasons why you should hold off on the largest purchase of your life.
Lack of Mobility
You’re in your 20’s. Not only is this a time for excitement, it’s a time for decision-making. Do you stay in your college city? Do you move back home? Do you follow your dream of chasing the endless summer? Buying a house at this point in your life certainly does one thing - it plants your butt firmly in one location and gives you a heck of a lot of responsibility.
You may think, “But I can sell the house at any time if I choose to move.”
Well, yes. But then you have to deal with closing costs, paying a broker, etc. If you move shortly after buying your home you’ll take it on the chin with fees and expenses.
You also have to deal with maintenance, property taxes, insurance, your roof developing a leak and the kid down the street that keeps egging your house. Do yourself a favor. Keep yourself mobile and your options open.
Increased Debt Burden
You will be taking on one of the largest purchases of your life and a mountain of debt.
Debt is a shackle that will hold you back from taking flight and can impair your ability to make decisions. When you have 30 years of debt payments (i.e., a mortgage), you can’t pack up and leave for that trip-of-a-lifetime. There is also your debt-to-income ratio that is important to consider. When this ratio gets too far out of whack, it will get more difficult to obtain loans for things like a car, credit cards, etc.
The Buy Versus Rent Debate
Whether you knew it or not, there has been a long-standing debate on the financial benefits of buying a home versus renting. The recession in 2008 that sent the real estate market swooning was painful for those that owned property. But even over the long term, the benefits of owning property can be argued against.
Just to be clear, owning real estate is not a bad thing. But, the numbers don’t lie. Buying a single-family home is not as great an investment as some would have you believe.