Benzinga
6 reasons why you should not buy a home
Owning a home may be the epitome of the American dream, but it’s not carved in stone! So, if you have been toying with the idea of giving up home ownership, then be sure to go for it. However, given that home ownership is perceived as a feature of wealth, giving it up will bring 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. Cost of home ownership are lifelong proponents of home ownership often argue that paying rent is expensive, but home ownership is just as expensive. The cost of home ownership does not end with that initial payment. It comes with a lifetime cost that will, compared to renting, create financial problems for you and take away your peace of mind. For example, utility bills like electricity and water are unavoidable and must be paid every month. According to Zillow, those bills alone cost homeowners between $ 2,300 and $ 4,600 a year. Add more recurring costs such as insulation, heating and cooling maintenance, homeowner insurance, property taxes, HOA fees, mortgage payments and yard maintenance, and chances are you end up spending more per year than a renter living in a house like yours. Moreover, there are no rejections. Once you buy a home, you commit to these costs unless you decide to sell it. On the other hand, when you rent or lease a house, you can always give up. For example, when the weather gets tough, you can always switch to income-based apartments until you get back on your feet. Home is not an investment in real estate Individuals from home will try to convince you that your home is an investment. While there is truth in this, buying a home as your primary residence is not the same as buying a home for rent or resale. Why? Well, when you buy a home for real estate, it brings you a return on investment. For example, when you buy an apartment and rent or lease it, it offers you a return on investment at least every month or every six months based on the terms of your agreement with the tenant. But when you buy a home for a living, you will invest, but you will not get a return. If nothing else, you will be the one to invest money in it through maintenance, mortgage payments and all the other aforementioned costs. In addition, a house can never be an investment if you do not plan to sell it at any time. What makes an investment an investment is your control over its ownership. In other words, investing in real estate is called such because you can buy it when its value is low and sell it when the value is high, making a profit. But your primary residence is different because you can’t wake up one morning and decide to sell it unless you’re pressed for money, which in most cases means you’ll accept any offer that leads to losses. Also, when you sign that home purchase agreement, your money is automatically locked and that is the only way you can get it by selling or taking a equity loan. When you rent or lease, you free up money and can use it to invest in opportunities that increase your wealth. Sure, you can argue that renting is expensive, but that’s not reason enough to buy a home because there are a lot of modern, well-equipped, low-income apartments out there to help you cut costs. The values of apartments are not always high It is true that a house increases in value over time. Due to inflation, a house bought for $ 100,000 is now worth more than $ 600,000. This means that you will make a good profit by selling. However, keep in mind that the real estate market is incredibly volatile. The value of your home may be high now and then it may fall sharply due to a falling real estate market and / or other external factors. For example, during the great financial recession of 2007-2009, real estate market values experienced a sharp decline, resulting in large losses to sellers. Existing values listed ranged from $ 7.1 million to $ 4.1 million, which meant a 25% drop in the value of homes sold during that period. What does this have to do with buying a home? Well, you can buy a home expecting its value to increase, but instead find that its value is incredibly low when you really need to sell it. The result? You will eventually sell it at a loss. Keep in mind that some factors are out of your control. For example, the real estate market may not collapse, but due to other components, such as increased crime, the value of homes in the neighborhood where you bought a home is declining. Such a phenomenon will make it almost, if not impossible, to find a buyer who is willing to take it off your hands, even at the purchase price. In other words, if you don’t have a magic crystal ball, you can’t say what will happen next with the general or your local real estate market. So, if you are buying a home now with the hope that its value will increase in the future, it is better not to buy it because you could be massively disappointed. Owning a home Binds you, unless you are rich and can’t afford to buy a house in different parts of the country, owning a home connects you to one place. If you get a fantastic job or an opportunity for entrepreneurship, you can’t just pack up and leave. First you need to put your home on the market and find a dealer to help you sell it. You also need to worry about market values, and since you’re in a hurry to move to the next location, chances are you’ll sell to the first buyer because you don’t have time to wait for better deals. But when you rent, all you need to do is pack up and get going. Even if you’re not moving, buying a home automatically means you’ll have to deal with the community around you for the rest of your life, especially if you’re not planning to sell it. For example, even if you don’t love your neighbors, you won’t have any options but to teach them to suffer. When you rent and dislike your neighbors, the option to leave is always sustainable. Home ownership is not for everyone. Not everyone is homeowner. It comes with responsibilities that some people just don’t have skin with. For example, when buying a home, especially in the HOA community, you need to ensure that the yard is well maintained, clean gutters, regularly repaint the exterior, and other similar tasks. Not everyone is deprived of such a level of responsibility, and if this describes you, never buy a home. Home ownership doesn’t define you Ownership of this modern apartment is great, but you can still enjoy living without having to deal with the stress of owning a simple rental. Home ownership does not define your success in any way. So if you’ve never wanted a home, don’t buy it because your peers own more houses. After all, home ownership leaves little to be desired. See more from Benzinge * Click here for Benzinge’s trade options * Amazon opens three facilities in San Antonio * The psychology behind the M1 Finance platform and its focus on Benzinga’s (C) 2020 financial well-being. com. Benzinga does not provide investment advice. All rights reserved.