6 Reasons Why You Should Not Buy A Home
Owning a home may be the epitome of the American Dream, but it is not engraved in stone! So if you have toyed with the idea of giving up home ownership, you should go for it anyway. But considering that home ownership is perceived as a hallmark of wealth, giving it up will give you a lot of controversy. Individuals in your circle may even criticize. But no matter what the larger population thinks, there are good reasons to never buy a home. Costs for Homeowners Lifelong Proponents of Homeownership often claim that paying rent is expensive, but homeownership is just as expensive. Home ownership costs do not end with the original payment. It comes with lifelong costs which compared to renting will create a buck in your finances and remove your peace of mind. For example, bills such as electricity and water are unavoidable and must be paid every month. According to Zillow, these bills alone cost homeowners between $ 2,300 and $ 4,600 annually. Add recurring costs such as insulation, heating and cooling maintenance costs, homeowners insurance, property taxes, HOA fees, mortgages and yard maintenance, and chances are you end up spending more annually than a tenant living in a house similar to yours . What’s more, there is no opt-out. When you buy a home, you commit to these costs unless you decide to sell it. On the other hand, you can always opt out when renting or renting a home. For example, when times get tough, you can always switch to income-based apartments until you are back on your feet again. A home is not a real estate investment Pro-private will try to convince you that your home is an investment. While there is truth in this, buying a house as your primary residence is not the same as buying a house for rent or resale. Why? When you buy a house for real estate, it gives you a return on investment. Eg. When you buy an apartment and rent or lease it out, it gives you return on investment at least every month or every six months based on the terms of your agreement with your tenant. But when you buy a home to live in, you have invested, but you get no return. If anything, you will be the one putting money into it through maintenance, mortgage payments and all the other previously mentioned costs. Plus, a house can never be an investment if you do not plan to sell it at some point. What makes an investment an investment is your control over its ownership. In other words, a real estate investment is referred to as such because you can buy it when its value is low and sell it when the value is high, which makes a profit, but your primary residence is different because you can not just wake up one morning and Decide to sell it unless you are hard pressed for cash, which in most cases means you will take any offer that leads to loss. When you sign that house purchase contract, your money is automatically locked down and the only way you can get it back is by selling it or taking out a home loan. When you rent or lease, you free up your cash and you can use it to invest in opportunities that grow your wealth. You can probably argue that renting is expensive, but that is not a good enough reason to buy a house, as there are plenty of modern, well-equipped, low-income apartments that will help you keep costs down. House values are not always high It is true that a house increases in value as time goes on. Due to inflation, a house bought for $ 100,000 is now worth over $ 600,000. That means selling it will give you good profits. Keep in mind, though, that the real estate market is incredibly volatile. The value of your home can be high now, then it can drop sharply due to a breakdown in the real estate market and / or other external factors. For example, during the great economic recession of 2007-2009, real estate market values experienced a sharp decline, with sellers incurring huge losses. Existing stock market values jumped from $ 7.1 million to $ 4.1 million, marking a 25% drop in the value of homes sold during this period. What does this have to do with buying a home? Well, you can buy a home that expects it to increase in value, but instead find that its value is incredibly low when you desperately need to sell it. The result? You end up selling it at a loss. Remember that some factors are beyond your control. For example, the real estate market may not go down, but due to other components such as increased crime, the value of housing in the neighborhood you bought your home in decreases. Such an event will make it almost, if not, impossible to find a buyer, who is willing to get it off their hands, even at a purchase price. In other words, unless you have a magic crystal ball, there is no telling what will happen next. So if you are buying a house now with the hope that its value will increase in the future, it is better for you not to buy one. , because you could potentially be massively disappointed. Tie yourself down unless you are wealthy and can afford to buy a home in different parts of the country, home ownership is for you somewhere. If you get a great job or entrepreneurial opportunity, you can not just pack and go. First, you need to market your home and find a real estate agent who will help you sell it. You also have to worry about market values, and since you are in a hurry to move on to your next location, chances are you will sell it to the first buyer because you do not have time to wait for better deals. But when you rent, all you have to do is pack and go. Even if you do not move, buying a home automatically means that you will have to deal with the community around you for the rest of your life, especially if you do not plan to sell it. For example, even if you do not like your neighbors, you have no choice but to learn to keep up with them. When you rent and do not like your neighbors, the opportunity to walk away is always viable. Home ownership is not for everyone Not everyone is cut out for home ownership. It comes with the responsibility that some people just do not have the skin to handle. For example, when buying a home, especially in a HOA community, make sure the garden is well maintained, clean gutters, repaint your exterior regularly, and other similar tasks. Not everyone is cut out for this level of responsibility, and if this describes you, never buy a home. Home ownership does not define you Owning a modern apartment is great, but you can still enjoy living in it without having to deal with the stress of ownership by simply leasing. Home ownership does not define your success in any way. So if you have never wanted a home, do not buy it because your peers own several houses. After all, home ownership leaves little to be desired. See more from Benzinga * Click here for options trader from Benzinga * Amazon Opening of three San Antonio facilities * The psychology behind the M1 Finance platform and its focus on financial well-being (C) 2020 Benzinga. com. Benzinga does not provide investment advice. All rights reserved.