These are 7 very convincing reasons why you should continue to rent a home and not buy one, at least just yet.
If You Expect To Move
If you expect to be re-located in the near future, you should be especially careful about buying a home. People move for many reasons which do not always have to do with their jobs.
Unless you’re planning to hold on to the property that you buy or convert it into a rental when you move, buying a home does not make sense because you will have to incur further costs in selling a home and buying a new one which will mean that your current property should have appreciated at least 15 to 20% in order to cover those costs.
Consider buying a property only if you intend to hold it for 3 and preferably 5 years.
If you are lucky and you are situated in a time and place where the property prices sky rocket then you could well make a profit if you sell after 5 years. This is fairly common in developing areas, cities and economies.
Pressure Of Sales Pitches
When you purchase your home, it will be you who will live in it and face the expenses. Do not purchase home under pressure from pushy salespeople or advice of other homeowners. Do it only when it makes complete financial sense to you.
You should understand that many people involved in the home buying transactions have a vested interest in convincing you to buy.
People like real estate agents, mortgage lenders whose livelihood depends on this business and people like you are purchasing homes, might give you the wrong idea about why you need to purchase a home.
What a mortgage lender is willing to lend you and tells you you can qualify for might be very different from what you can actually afford.
When you purchase a home, you’re also buying into the community, the neighborhood, the commute to your job and all its amenities. See if all the logistics work out for you. While a drive for an of the office may not seem significant as compared to owning a home in a nice locality and at a good price, it may soon get to be tiresome and may make you tire of your commute, your job and your new home. Take your time and consider all important factors that are going to affect your life by purchasing the home.
Need To Borrow More Than You Can Afford
Spending more than you can afford when buying a home can be a very costly mistake indeed. Many people over estimate the amount they can afford because they have been renting at a lower cost and spending money on comfort and leisure activities.
When it comes to purchasing a home they usually borrow to the maximum limit and overextend themselves. Many people also believe that sum of money that the mortgage lender is willing to qualify them for is the amount that they can afford to borrow. This is not always true,
Just like you can overspend and overextend yourself when buying a home, many people can also make the mistake of borrowing much less than what they can afford.
Take the example of someone who borrowed less than half of what they could actually afford to pay on a mortgage and purchased a home knowing well that they will need to move into a bigger place soon into the future. Having to relocate and purchase another property soon eats up into the equity of your current property. Selling and buying a home both cost money.
By the time you have paid for the costs of selling your house and purchasing a new one, you have probably lost all the equity that you built up in your home and maybe even your down payment.
It is said that you need at at least 3 and preferably 5 years just to recover that you are going to have to spend in selling and buying a new home.
Do not buy a home simply because it seems like the mature thing to do.
You might feel a lot of peer pressure to purchase home if your siblings, coworkers and your friends are all homeowners. Buying a home reflects on the financial security and success of a person. All said and done, it is a major milestone in a person’s life. However, you should realize that everybody has different needs and not everyone should own a home and certainly not at every point in their adult lives.
A study even supports the notion that the life of a typical renter is in some ways better than that of the average homeowner. Here are some of the results of the survey conducted with thousands of people.
- Homeowners are less social on average than renters and spend less time with friends, neighbours and coworkers.
- Homeowners spend more time on household chores.
- Perhaps for the above reasons, renters have more sex and less marital discord and cope better with parenting that homeowners do.
Fear Of Escalating Prices
It is a common fear and maybe even justifiable that the escalating home prices will make it impossible for you to buy a home in the future if you do not buy one today.
Escalating house prices scare many renters and make them feel like they should purchase a home as soon as possible. News of booming housing prices make front page news and are often boasted about by existing homeowners.
The truth is that never in the history of real estate business have the prices become so high as to price number of people out of the market.
In fact if the home prices or on a peak now, you can be rewarded by being patient and wait till the market prices stabilize or even decline.
It is extremely important to understand that while you might not be completely locked out of the housing market by escalating prices, the price of homes are likely to increase faster than the rate of inflation. This means that you will be able to buy less home for your money in the future then you could today.
Not Knowing What You Can Afford
When it comes to purchasing the home you need to consider and examine your overall financial situation and goals. People usually have many financial needs and requirements that they want to fulfill such as saving for retirement, paying for children’s college education etc. which need to be figured in the decision of purchasing a home.
Don’t expect your house agent or mortgage broker to bring this issue to your attention. They might be motivated by their own vested interests or are simply not trained to look at this aspect accurately.
Evaluate your finances carefully before you make the decision to buy a home.