Benzinga
6 Reasons You Shouldn’t Buy a Home
Owning a home may be the epitome of the American dream, but it’s not set in stone! So if you’ve toyed with the idea of giving up home ownership, then by all means go for it. Given that home ownership is perceived as a hallmark of wealth, giving up home ownership will create a lot of controversy. People in your circle might even criticize. Regardless of what the larger population thinks, there are good reasons never to buy a home. Homeownership costs are lifelong Homeowners often argue that renting a home is expensive, but owning a home is just as expensive. The cost of home ownership does not end with this initial payment. It comes with lifelong costs which, compared to renting, are a burden on your finances and take away your security. For example, utility bills such as electricity and water are inevitable and must be paid every month. According to Zillow, those bills alone cost homeowners between $ 2,300 and $ 4,600 a year. Add in recurring costs like insulation, heating and cooling costs, homeowner insurance, property taxes, HOA fees, mortgage payments, and yard maintenance, and chances are you’ll end up spending more per year than a tenant staying in a similar one House like yours. There is also no opt-out. Once you’ve bought a home, unless you decide to sell it, commit to these costs. However, if you are renting or renting a home, you can always opt out. In difficult times, for example, you can always switch to income-based housing until you are back on your feet. A house is not a real estate investment Pro-home people will try to convince you that your house is an investment. While this is some truth, buying a home for your primary residence is not the same thing as buying a home for rent or resale. Why? Well, when you buy a home for real estate it will bring you a return on investment. For example, when you buy and rent or rent a condo, it offers you a return on investment at least every month or every six months based on the terms of your agreement with your tenant. But if you buy a home to live in, you have invested but you are not getting a return. If anything, you are the one investing money through maintenance, mortgage payments, and all of the other costs mentioned above. Also, a home can never be an investment if you don’t plan on selling it at some point. What makes an investment an investment is your control over your property. In other words, a real estate investment is named because you can buy it when its value is low and sell it when it is high for a profit. Your primary residence is different, however, because you can’t just wake up one morning and opt to sell unless you’re struggling with cash, which in most cases means accepting any offer that leads to a loss. When you sign this sales contract your money will be automatically locked and the only way you can go is to get it back by selling it or taking out a home equity loan. When you rent or lease, you free up your money so you can invest in opportunities that will grow your wealth. You could safely argue that renting is expensive, but that’s not a good reason to buy a home since there are plenty of modern, well-appointed, low-income apartments that can help keep costs down. Home Values Are Not Always High It is true that a home increases in value over time. Because of inflation, a home bought for $ 100,000 is now worth over $ 600,000. That means that selling will bring you good profits. However, be aware that the real estate market is incredibly volatile. The value of your home can be high now, then it can fall sharply due to a property market crash and / or other external factors. For example, during the great financial recession of 2007-2009, property market values fell sharply, causing massive losses for sellers. Existing listing values decreased from $ 7.1 million to $ 4.1 million, a 25% decrease in the value of homes sold during the period. What does this have to do with buying a home? Well, you can buy a home that is expecting to increase in value but instead find that its value is incredibly low when you need to sell it urgently. The result? You end up selling it at a loss. Note that some factors are beyond your control. For example, the real estate market may not crash, but due to other components like increased crime, the value of houses in the neighborhood where you bought your home is going down. Such an event makes it almost, if not impossible, to find a buyer willing to get it off your hands even for a price. In other words, if you don’t have a magic crystal ball there is no telling what will happen next.If you buy a house now in the hopes that its value will increase in the future, you should not buy a house as you may be massively disappointed Might Bind You If you are not rich and cannot afford to buy a home in different parts of the country, home ownership binds you in one place. When you get a fantastic job or entrepreneurship opportunity, you can’t just wrap up and go. First, you need to get your home on the market and find a realtor to help you sell it. You have to worry about market values too, and in a rush to get to your next location, chances are you’ll sell it to the first buyer because you don’t have time to wait for better deals. But when you rent, all you have to do is pack and go. Even if you don’t move, buying a home automatically means you will have to deal with the community around you for the rest of your life, especially if you don’t plan on selling it. Even if you don’t like your neighbors, you have no choice but to learn to put up with them. If you rent and don’t like your neighbors, the chance to leave is always possible. Home ownership is not for everyone Not everyone is suitable for home ownership. It comes with responsibility that some people just don’t have the skin to handle. For example, whenever you buy a home, especially in a HOA community, you need to make sure the garden is well maintained, cleaning gutters, repainting your exterior regularly, and performing similar tasks. Not everyone is fit for this level of responsibility, and if this describes you, then never buy a home. Home ownership does not define you. If you know modern condos are great, you can still happily live in them without having to deal with the stress of owning property through simple leasing. Home ownership in no way defines your success. So if you’ve never wanted a house before, don’t buy it as your co-workers own multiple houses. After all, home ownership leaves little to be desired. For more information, please contact Benzinga. * Click here to purchase options from Benzinga. * Amazon opens three facilities in San Antonio. * The psychology behind M1 Finance’s platform and its focus on Financial Wellbeing (C) 2020 Benzinga. com. Benzinga does not offer investment advice. All rights reserved.
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This article originally appeared on finance.yahoo.com
