While owning a home is often considered part of the “American dream” that everyone should drive for, making that major purchase isn’t right for all. Many people feel like they “should” do what everyone else seems to be doing, without actually considering that it may not be the best decision for their lifestyle or financial situation.
You’ll find plenty of reasons to buy a house, but here’s why you shouldn’t purchase that enticing house among St. Albert real estate or anywhere else.
You Haven’t Saved Up Enough for a Down Payment
Saving for that hefty down payment is not only a big challenge, but it will also reduce your ability to build wealth over the long term as it doesn’t make sense to put that cash into an investment that comes with some risk. Experts have typically advised that a down payment on a home should be 20 percent, although the average was around 13 percent according to the National Association of Realtors.
Either way, that’s a lot of money to stash away that’s unlikely to be providing you with a decent return. And, if your income is low, it may take years to save enough, $39,000 to $60,000 for a $300,000 house based on the figures above. Even if you were approved for a mortgage that only required 5 percent down, that’s $15,000 in addition to closing costs and other fees – and, you’ll probably have to pay a higher interest rate too.
You Aren’t Sure If You’re Committed to Your Location
If you aren’t absolutely certain that you’ll be able to stay in one place for a long time, perhaps you’ll need to relocate for a job, or a relationship, buying a house is not a good idea. If you aren’t in it for at least five years, you’re likely to be on the losing end financially. That means if the perfect career opportunity comes up hundreds or thousands of miles away, you’d have to hope that your home sells quickly, or you’ll be forced to rent it to someone else. If it sits empty, trying to pay a monthly mortgage payment and rent at the same time could easily leave you drowning in debt.
You Don’t Have the Time
Do you enjoy traveling, have a hobby, or another passion that takes up a lot of your time when you aren’t working? Owning a home often means you won’t have much if any time left after taking care of the yard and other maintenance issues. Of course, surprise repairs could leave you with little money to do so either.
You Have A Lot of Debt and/or Poor Credit
If your monthly debt and other expenses eat up more than half of your gross income each month, you probably can’t afford a mortgage payment, and the odds of getting approved for the loan will be slim. High debt means your credit score is negatively impacted too. Either way, poor credit will likely disqualify you from getting that home loan. Even if you are approved, your interest rate will be sky high, and a higher interest rate means a higher mortgage payment.