Buying a home is a big deal.
You have the career, the down payment and the timing couldn’t be better. You’re sure that buying a home is the next logical step.
At least that’s what everyone is telling you, right?
So what to do? While there are a lot of great reasons to buy a home, there are also a few drawbacks you should consider before making the leap:
1. Your savings need to survive the purchase
It’s really tempting to think that buying a home is worth all the sacrifices. But remember, you’ll need a down payment, money for closing costs, and probably some extra scratch to spruce up your new place.
But buying a house or condo is an investment, right? Why wouldn’t it be a good decision?
While it’s true that buying a home can be a wise investment, it’s important to consider what draining your savings accounts will mean for your future financial emergencies.
When we bought our home, our finances were geared towards managing our household and there wasn’t a lot left over at the end of the month to deal with any unanticipated costs.
But then we had a car mishap and we needed to come up with $2000 to repair a cracked radiator clip.
This wasn’t something we could put off, so we desperately had to try to find another couple grand in our budget because we didn’t have an emergency fund.
So before you buy a home make sure you will still have some resources left for dealing with car repairs, unexpected illnesses and other emergencies that will crop up when you least expect them.
2. You’ll have to pay when stuff breaks
In all the excitement of buying a home it’s easy to forget that there are costs associated with owning that you don’t have while renting.
A pipe bursts in your building and it’s the landlord’s problem. Your stove goes on the fritz and it’s your landlord’s problem. Your hot water tank starts leaking and it’s your landlord’s problem.
But the minute you own your own property, all those pesky problems become your problems.
What once was a minor annoyance can become a big deal now that you have to pay for the repairs yourself. You might not think anything will break before you’re ready, but something usually does.
For example, two years into owning the home there was a severe summer storm that sent water pouring through the light fixtures in our upstairs bedroom. Our roof had sprung a leak and we had to scramble to come up with the money to repair all the damage.
We did it but boy was it tough. Making sure we had an emergency fund would have made all the difference.
3. A home is not a retirement plan
Back in the day it seems like people used to buy a house, live it in for thirty years and then cash in for an instant retirement fund. While this can still happen in certain real estate markets, there are certainly no guarantees.
When you buy a home it’s important that you still plan on saving for your retirement. You don’t want to have to rely on your property value increasing in order to make sure you have enough money to retire.
Plus a home is not a liquid investment – which means once you put your money into it you won’t be able to get it back out until you sell. This can obviously be a huge problem, since you’ll always need a place to live regardless of what financial emergencies come up in your life.
4. You’re committing to stay in one place
Buying a little condo might seem like the perfect way to start out. You’ll get a toehold in the market while also owning your own little slice of the world.
But it’s important to consider both where you are now and where you want to be in the future. Do you want a family? Do you plan on teaching English overseas for a couple of years? Do you want to go back to school and get an advanced degree?
You might not want to put off your present for the sake of a potential future, but if you want to buy a home there’s a certain amount of commitment that goes along with that plan.
Remember, selling can be even more expensive than buying so you’ll want to be committed for the long haul before you buy a home!
Set some goals and plans now so you can see how owning property fits into your future.
Buying a home can be a great decision if you’re ready for it, but it can also make your life much more complicated if you’re not prepared. So consider all your options and make the right decision for you, not for everyone else.
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