Benzinga
6 reasons why you shouldn’t buy a house
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, definitely go for it. However, since home ownership is seen as the hallmark of wealth, giving it up will cause you a lot of controversy. People in your circle can even criticize. But regardless of what the larger population thinks, here are good reasons never to buy a home. Ownership costs are lifelong. The cost of home ownership doesn’t stop with that first payment. It comes with a lifetime cost, which, compared to renting, will put a dent in your finances and take away your peace of mind. Utility bills such as electricity and water, for example, are unavoidable and must be paid every month. According to Zillow, these bills alone cost homeowners between $ 2,300 and $ 4,600 annually. Add to that recurring costs such as insulation, heating and cooling maintenance costs, homeowners insurance, property taxes, HOA costs, mortgage payments, and yard maintenance, and chances are you will spend more annually than a tenant living in a home that is similar. is with yours. In addition, there is no option to unsubscribe. Once you buy a home, you commit to these costs unless you decide to sell it. On the other hand, when you rent or rent out a home, you can always unsubscribe. For example, if times get tough, you can always switch to means-tested apartments until you’re back on your feet. A home is not a real estate investment Pro-home individuals will try to convince you that your home is an investment. While there is some truth to this, buying a home as a primary residence is not the same as buying a home to rent or resell. Why? Well, buying a home for real estate will give you a return on your investment. For example, if you buy an apartment and let or rent it out, it will provide you with a return on investment at least every month or every six months. the terms of your agreement with your tenant. But if you buy a home to live in, you have invested, but you will not get a return. If anything, you’re the one who puts money into it through maintenance, mortgage payments, and all the other costs mentioned earlier. Plus, a home can never be an investment if you don’t intend to sell it at any point. What makes an investment an investment is your control over its ownership. In other words, a real estate investment is so named because you can buy it when the value is low and sell it when the value is high, making a profit, but your primary residence is different because you don’t just wake up one morning and decide to sell it unless you are having a hard time getting cash, which in most cases means you will accept any offer that leads to losses. Also, when you sign that purchase agreement, your money is automatically locked, and the only way you can get it back is to sell it or take out a mortgage. When you rent or lease, you free up your money and use it to invest in opportunities that increase your wealth. Of course you could say that renting is expensive, but this is not enough reason to buy a house there are plenty of modern, well-equipped, low-income apartments that help you keep costs down. Housing values are not always high It is true that a home increases in value over time. Due to inflation, a home bought for $ 100,000 is now worth more than $ 600,000. That means that selling it will bring you good profits. However, keep in mind that the real estate market is incredibly volatile. The value of your home may be high now, then it could drop sharply due to a crash in the real estate market and / or other external factors. During the great financial recession of 2007-2009, for example, the value of the real estate market fell sharply, resulting in huge losses for sellers. The value of the existing listing fell from $ 7.1 million to $ 4.1 million, representing a 25% decline 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 expecting it to increase in value, but instead, you must find that its value is incredibly low when you need to sell it urgently. The result? You end up selling it at a loss. Keep in mind that you cannot control some factors. For example, the real estate market shouldn’t crash, but other components such as increased crime will cause the value of homes in the area where you bought your home to drop. Such an event makes it almost, if not, impossible to find a buyer who is willing to take it off your hands, even at a purchase price. In other words, unless you have a magical crystal ball, there is no telling what what will happen next So if you are buying a house now in the hope that its value will increase in the future, you should not buy one as you could potentially be very disappointed. Ties Down Unless you are wealthy and can afford to buy a home in different parts of the country, home ownership will bind you to one location. When you get a great job or entrepreneurial opportunity, you can’t just pack up and go. First, you need to market your home and find a real estate agent to help you sell it. You also have to be concerned about the market values, and since you’re in a hurry to move to your next location, chances are you’re going to sell it to the first buyer because you don’t have time to wait for better offers. But when you rent, all you have to do is pack up and go. Even if you don’t move, buying a home automatically means spending the rest of your life with the community around you, especially if you don’t plan on selling it. For example, even if you don’t like your neighbors, you have no choice but to learn how to get along with them. If you’re renting and your neighbors aren’t allowed, the option to walk away is always feasible. Home ownership is not for everyone Not everyone is crazy about home ownership. It comes with responsibilities that some people just can’t handle. For example, when you buy a home, especially in a homeownership community, make sure the yard is well maintained, clean gutters, repaint your exterior regularly, and perform other similar tasks. Not everyone is suitable for that level of responsibility, and if this describes you, never buy a house. Home Ownership Doesn’t Define You Owning that modern apartment is great, but you can still enjoy it without having to deal with the stress of owning by simply leasing. Home ownership in no way determines your success. So if you never wanted a house, don’t buy it because your peers have multiple houses. After all, home ownership leaves little to be desired See more from Benzinga * Click here for Benzinga options trading * 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 provide investment advice. All rights reserved.