Should I Give In to Pressure to Buy a Home?

Senior man with adult son

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Buying a home is an important part of reaching adulthood, and a major financial step, as well.

The expectations to buy a home may come at different times depending on your age, profession, even your marital status. Often people will begin to put pressure on you to purchase a home shortly after you graduate from college and land your first job. Or they may put on the pressure once 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 financial picture before you decide to take on the additional responsibility of homeownership.

Before you consider buying a home consider the following:

Consider Your Debt

If you have a large amount of debt, it might be wise to pay off some or all of that debt before you take out a mortgage and buy a home. Remember, a mortgage is another form of debt.

Here's why: Buying a home when you have a significant amount of debt, either in credit card debt, student loan debt, or other debt, can impact the type of mortgage you are able to get. If your debt-to-income ratio is too high, you may be limited in what mortgage amount you're approved for, or you may not be approved at all.

Your debt-to-income ratio can greatly affect the type of mortgage you're able to get. If it's too high, you may not be approved for a mortgage at all, or you may be approved for one with less than desirable terms.

Keep in mind that when you buy a home, in addition to paying your mortgage, you will need to pay property taxes, home maintenance, and repairs. This should factor into your budget, as well.

Your Location

If you're not sure you want to stay in your town or city for at least five years, you may want to put off buying a home.  That's because the five-year mark is considered the break-even point for purchasing a home. Otherwise, you will likely lose money when you sell your home.

You may be in a career field that requires you to move often, such as a consultant, management track, or in the military. In this case, it's probably not a good idea to purchase 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. 

Don't Become House Poor

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. Don't forget: you will also have to pay for home maintenance, taxes, and repairs. You need to be in a position where you can comfortably make the house payment, and then some.

In addition to your mortgage payment, you will also have to pay for taxes, repairs, and maintenance on your home, so be sure to factor that into your budget.

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. And 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. 

Responding to Pressure

It's also useful to have a canned response you can use when people ask you if you are ready to buy a home. 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 should deflect most people, and it does not go too deep into your personal financial situation.

Remember, you are the one taking on the mortgage, and so you need to be completely comfortable with the decision before you buy. It is OK to wait until you're ready.

Updated by Rachel Morgan Cautero.