The Worst Reasons to Buy a Home
Pursuing homeownership is something that is ingrained in our culture, to the point that owning a home is considered an integral part of the American Dream. The path most of us are encouraged to take goes something like this: graduate college, get married, buy a home, have children. It seems to be just what you do.
Unfortunately, many people step into homeownership based on myths or misguided information.
If you’re in the market for a home, beware of these common but ill-advised reasons for becoming a homeowner.
It’s the Right Time to Buy
“If you don’t buy now, you’ll miss your window.” Ever hear that one? A popular reason potential buyers chase homeownership is the so-called “right time to buy.” Whether it’s because interest rates are low or home prices are down, it’s easy to get caught up in thinking that if you don’t strike while the iron is hot, you’ll miss out.
Yes, buying when interest rates and home prices are low obviously works to your advantage. But favorable conditions in the housing market is not in itself a reason to jump into homeownership. Overextending yourself or prematurely purchasing all in the name of the “right time to buy” will later come to haunt you.
Maybe you're the last in your social circle to buy, you can’t visit the in-laws without being asked if you’re looking for a home, or you’ve been told that owning is a sign of financial well-being.
Giving in to social pressure — whether it’s brought on by yourself or inflicted by others — will get you into trouble, especially when you're talking about a purchase that’s potentially hundreds of thousands of dollars. Put your blinders on and don’t let the urge to keep up with (or please) the Joneses dictate such a major financial decision.
An Expected Life Change
There is a misconception that about 10 minutes after you marry, you need to buy a home. Or that if you have a little one on the way, you cannot bring them home to a rental — because a baby needs more space and the peace of mind that mom and dad are homeowners.
Do not fall for the myth that you need a home purchase to accompany a significant life change. Your life will not be “complete” simply because you own. Rushing homeownership to coincide with the timing of marriage, birth, or another major event could cause you to purchase something you otherwise wouldn’t.
Renting Is a Waste of Money
The renting versus buying debate is nothing new. There are scenarios where renting makes sense, and some where buying does.
If you are in a strong financial position to purchase and you want to do so, then buying likely is a path you should pursue. But do not seek homeownership mainly because of the myth that renting is throwing your money away.
Comparing the two is more complicated than just sizing up the payments next to each other. This calculator will help you weigh the costs of renting against buying, taking into consideration the variables of both scenarios.
A Home Is an Investment
You might be considering homeownership because you see it as an investment.
But it can be argued that your personal residence is a liability.
There is no guarantee that the value of your home will go up. Depending on when you buy, when you sell, and how much you put down, it is possible to lose money on this “investment.” Throw in the costs of maintenance and upgrades; interest paid; and depreciation, and it is clear that there are no guaranteed returns on purchasing a home.
Determine Your Reasons to Buy
If you’re in the market for a home, carefully weigh your motives and your desire to own. If you’re primarily motivated by one of these reasons, take a step back and reassess your goals. You do not want to find out the hard way that you bought with the wrong intentions, or before you were ready.
Purchasing a home will affect your life and your finances for years to come.
Make sure you do it for the right reasons.