Should I Give Into Pressure to Buy a Home?
Buying a home is an important part of reaching adulthood. It is an important financial step as well. The expectations to buy a home may come at different times depending on your current situation in life. Often people will begin to put pressure on you to purchase a home shortly after you graduate from college and land your first job. They may want you to buy a condo to help save money. You may also be receiving pressure to buy a home shortly after you get married.
In many ways it does seem like the next logical step in your progression.
However, it is important to realize that your situation may be different from those around you. It is important to look at your entire picture before you decide to take on the additional responsibility of home ownership. You need to be prepared to deal with the extra costs and limits that owning a home can put on you and your family. A home can tie you down and hold you back, and it may not always be the best option for your situation. Before you commit to buying a home you should weigh the pros and cons of renting versus buying.
If you have a large amount of debt, you need to wait to purchase a home until you have turned your situation around. Generally, you will be able to rent for less than you would spend on a home, which will make it easier to pay off the additional debts that you have accumulated. Buying a home when you have a significant amount of credit card debt can make it more difficult to get out of debt, because you have to pay for all home repairs itself.
In addition to paying your mortgage, you will need to pay property taxes, and for repairs. Some rent also covers the cost of utilities, which can help you save a lot of money.
If you know that you are not in the area where you want to settle down, you may want to put off buying a home until you are going to be in a location for at least five years.
This is considered the break even point for purchasing a home. Otherwise, you are just losing on the transaction. Military families that are regularly transferred usually wait to buy a home until they retire from the military. You may also have a job that transfers you from location to location every one or two years. This would not be the best time to buy a home. Instead put the money you save by renting into a savings account to put towards your home once you have a more permanent location where you can settle down. Additionally, the market may go down, and you may not be able to sell right away even though you have to move. You do not want to become a long distance landlord if you can avoid it.
If you can barely make ends meet, then you are not ready to purchase a home. You never want to stretch to make your monthly mortgage payment each month. This will cause you to be house poor, and it can make you regret buying a home in the first place. You will have to make home repairs, maintain the yard and deal with other expenses and responsibilities that you do not have if you are renting. You need to be a in a position where you can comfortably make the house payment. This may mean cutting back on some expenses or saving up a larger down payment so that you have to borrow less to buy your home.
There are things you can do to get ready to buy a home. Take the time now to get out of debt and into a better financial situation. If you cannot afford to buy a home in your area, you may want to wait so you can save up a larger down payment.
It is important to have a response you can use when people begin pressuring you to buy a home. The best answer is to simply say that you are working on saving up a down payment or that you want to wait until you are going to be settled in a specific area. This answer should deflect most people, and it does not go too deeply into your personal financial situation. You are the one taking on the mortgage, and so you need to be completely comfortable with the decision before you buy. It is okay to wait. You can work on getting ready to buy by cleaning up your debt and putting money aside for a home.