There are a lot of great reasons to become a homeowner. But there are also millions of people who regret jumping in before they were ready.
Buying a house is the biggest financial decision of your lifetime, so it’s important to take your time with the process and be smart about it. Here are three not-so-good reasons to buy a house.
All your friends are doing it
Just because all your friends are buying and moving into the same neighborhood doesn’t make it a good idea for you. Your friends might be in a different spot financially than you are. They might have different goals, incomes and savings accounts.
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Make sure that house in that neighborhood is right for you before moving forward. Let your friends make decisions that are right for them, and you make decisions that are right for you.
Because you can put zero dollars down
It’s tempting to skip the down payment, but putting zero dollars down is the catalyst for many housing disasters.
If you can’t afford a decent down payment — say, 20 percent of the purchase price — you might be setting yourself up for trouble. Spread yourself too thin and even the smallest trip to the ER will leave you wondering how the mortgage is going to get paid. In other words: If you don’t have money, don’t buy a house.
Because it’s a good time to buy
So what if the weather is perfect for flying — that doesn’t mean just anyone can jump in an airplane and take off. Clear skies are still for experienced pilots only.
Just because interest rates are at an all-time low does not mean it’s a good time for you to buy. A low interest rate won’t do much good if you aren’t ready to make a serious financial commitment. Houses are bought with cash, not with an interest rate, and interest rates go up and down all the time. Just sit tight and get in better financial shape before jumping into the market before you are ready.
Outside factors have little to do with it. It’s important to prepare yourself emotionally, financially and even in your relationships and career before making the biggest purchase of your life. The perfect time for you to buy is when you are ready — and not a minute sooner.
Derek and Carrie Olsen are monthly money columnists for Ink challenging you to take a closer look at your finances. Visit howdoimoney.com/ink for resources to help pay off debt, grow your net worth, and have fun doing it.