5 Reasons Not to Buy a House and 5 Reasons You Should

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While buying a home is often referred to as the American Dream, if you buy before you are ready, there can be major financial consequences. For one, if you overspend, you can become house poor.

It is important to buy a home for the right reasons. You should be sure you are ready and aren’t just buying because it’s what you are expected to do, or it’s the next step .

Read on for five reasons you should not buy a home, and five reasons why it might be a good next move when trying to decide if you should rent or buy.

5 Reasons You Shouldn’t Buy a Home

1. Pressure from Other People

When you reach a certain age or start a family or get married, you may get pressure to buy a home. Family and friends may have expectations that it is time to buy a home and “settle down.”

It is important that you are ready and stable enough to buy a home. Until you (or you and your spouse, if you are married) feel ready to commit to buying a home, you should not do so, no matter what your friends or family think.

2. You Plan to Move

If you know your job will transfer you or you plan to move due to school graduation or other life event, you may be better off renting a home rather than buying a new house each time you move.

The rule of thumb is to buy a home if you plan on being in the area for at least five years. Owning a home also comes with difficulties. For example, if you lose your job, it can be tough to pay your mortgage or move for a new job.

3. You Qualify for a Mortgage

Just because you qualify for a mortgage doesn’t mean you are ready to own a home. It is a good idea to address any spending issues or debt before you buy a home. Also, it’s a great idea to set up a budget before you buy a home so you know how much you can afford.

It’s also a good idea to save up a down payment so you get the best possible mortgage. It bears repeating: Even if you can qualify for a mortgage, it does not mean that you are really ready to buy.

4. Debt

If you are carrying large amounts of debt, you should not buy a home. Large amounts of debt can prevent you from paying your mortgage which will severely damage your credit and financial health.

You also should try to keep your debt-to-income ratio as low as possible, so if you already have a large amount of debt, taking on even more debt in the form of a mortgage may not be wise.

5. Home Repairs and Fixer-Uppers

Another reason to put off buying a home is to save money on the inevitable costs of home maintenance.

If buying a home is stretching your budget to begin with, chances are you will not be able to cover home repairs and annual maintenance costs. Additionally, if you travel a lot, it may be difficult to care for the yard throughout the year, and paying someone to do it for you can be a large additional cost that you didn’t plan for.

5 Reasons You Should Buy a Home

1. You Feel Ready

Purchasing a home is a big step. It’s not a purely financial decision; it’s also an emotional one. So it makes sense to be nervous to make such a large purchase, plus take one the financial responsibility and the cost of upkeep. However, if you are ready both financially and emotionally, you should take the step to buy a home. A home can not only provide security and a sense of accomplishment, it can also set you up for financial success.

2. Building Equity

One of the best things about owning a home is building equity. Instead of throwing money away on rent each month, you are actually putting it toward your home. In the case that you wish to sell your home, you are then able to recoup some of this money to put toward your next home or another big purchase.

Keep in mind that the housing market can be unpredictable, so there is no guarantee that your house will greatly increase in value, though usually, that is the case.

If you are lucky enough to pay off your home, you can sell it and collect a large sum of money. You can take that money and put it toward retirement or use the equity to help you move to a nice home.

3. You Are Secure in Your Job

If you are fairly secure and certain that you will stay in your current job, it is a good idea to buy a home. Having a steady income will help you stick to your budget, pay your mortgage, and build equity. It will also prevent you from throwing away money on rent.

4. Tax Break on Mortgage Interest

The first few years of paying on your mortgage, the majority of your payment will go to paying on the interest. You can deduct a percentage of your interest from your taxes. This can help you reduce the overall amount that you pay in taxes each year. It is an additional perk to owning your own home.

5. Stability

Everyone gets to the point where they want stability in their lives. Owning your own home gives you a set neighborhood, schools and community that you can call your own.