There is a lot of hype over buying a house. We’re told to save for a mortgage as soon as we are out of college and getting a wage. But one thing that we aren’t told, is that buying a house isn’t going to be an investment for everyone. It won’t lead to financial security for everyone. What you need to think about carefully are your circumstances, your family situation, your locality, and the climate of the housing market. Heck, even some of the tax benefits of owning a home aren’t always all that they’re cracked up to be. So here are some reasons why owning a home may not be the best investment for you.
It May Lose You Money
As far as investments go, it could lose you more money that it could make you. Your money could be better off elsewhere if you’re looking to invest. What is important is checking on the housing market when you’re looking to buy. Are you in an area where prices are rising and rising, or would you be living in an area where it is simply inflation that is increasing the price of houses? While you might make some money after buying a house and selling it ten years later, investment-wise, you could have made more money elsewhere.
You Can Still Pay a Lot of Interest
While some people do buy a home without a mortgage, over seventy percent of homeowners do have a mortgage, so take out a loan in order to buy. Mortgage rates can be pretty low, as far as loans go, but when you’re borrowing quite a lot of money anyway. So when you think about the interest on a home, you could be paying around $5,000 a year on interest, if the rate was around 4%. Add that up over 30 years and you’ve paid $150,000 more than you needed to. So before you think about buying, you do need to do the calculations. Looking to rent flats could mean that you pay less over your lifetime than you would if you are buying and paying interest on a mortgage. So take time to figure out the interest repayments.
Homes Cost a Lot To Maintain
A lot has to be said about renting a home. The negative is that it isn’t yours. But then at the end of the day, as long as things weren’t your fault, you’re not the one that needs to pay for the repairs. The roof gets damaged because of a storm? Not your problem. It will be the landlord or homeowner that will be the one paying for the repairs. Of course, you can get insurance. But sometimes, the wear and tear on a home can be pretty pricey.
Now, this isn’t to say that owning a home is a bad thing. It just needs careful consideration before you take the leap, as there can be many hidden costs that you might not have thought about. So take time, work out calculations, and assess the housing market in the city you want to buy in.