Despite the fact that I help people buy and sell real estate for a living, I don’t think homeownership is for everyone. (There, I said it.)
For the most part, I strongly support investing in real estate and homeownership. I think it is an excellent way to build wealth, and provide security and stability in many ways.
However, there are a few reasons why I think buying a home and committing to a 30-year mortgage might not be right for someone*:
You don’t have a rainy day fund. An emergency fund is one of the first steps in a solid financial plan. Life happens, and inevitably, things will pop up, especially with homeownership. You may, literally, need money for a rainy day when your roof starts leaking or your basement floods. A pipe will break, a water heater will need replacing, you’ll need to paint every now and then. You’ll want to be prepared for it, in order to maintain your home in good condition and allow you to sleep better at night.
You have mountains of consumer debt and/or your credit score is terrible. Bad credit often translates to paying more in interest on your mortgage. You may be better off paying down some of that debt, improving your credit score, and buying later. (The tricky thing is, if interest rates are rising, waiting may not necessarily be beneficial. This is why it’s important to evaluate each situation on an individual basis.)
You plan to relocate in the near future. On top of the purchase price for a home, there are closing and other costs involved when buying a home. Think moving expenses, furniture, etc. If you plan to sell and relocate in the near future, prices might not appreciate fast enough for you to recoup the entirety of these expenses. (Good news is, homes in San Francisco appreciated at a rate of 13% last year.)
If you’re unsure whether buying a home is right for you, I’d be happy to provide a free consultation for you to explore some of the pros and cons for your unique situation.
*I am not a financial advisor and suggest consulting with a certified financial planner prior to making any investment decisions.
Corpen Real Estate Group CaBRE #02010273