Buying a home isn’t a light matter. It’s a huge commitment. When you rent, you can do whatever you want after the lease is up. When you own a house, you can’t up and leave. You also seriously risk losing money if you move before a certain number of years. Just because you can afford to buy a house, is not in itself a reason to purchase. You’ve got to think about how all of the factors come into play. If you’re 27, you’ve got a lot of life turning points ahead of you, and its unreasonable to think that are going to be in that exact spot forever. Below are some questions you really need to consider before you buy a house.
Are you going to be able to live there for a long time? If the answer is no, you need to keep renting. Not only does buying a house cost money, but selling a house requires spending money. Most people don’t realize this. There are many fees that come along with selling a home. If you aren’t going to be able to live in the house for 5 or more years, you need to stay a tenant.
Would you be okay, or miserable if you had to stay longer than 5 years in the house you plan to purchase? If the answer is that you wouldn’t be happy staying longer than that amount of time, then you should keep renting. This is because after 5 years for example, maybe the housing market will be in a bad place, and you’ll need to stay longer in order to not lose a lot of money. You never know what the market will be like at any given time. Read: Should You Buy or Rent? The Economics of Home Ownership.
Is your career stable in terms of location? If you have a job that is going to require you to travel, you probably aren’t going to want to be tied down in one location. Especially since, if you travel, you won’t have time to keep up maintenance on a home. Of course, you could always rent it out when you aren’t there, but this will still require maintenance. Plus, having tenants is stressful.
Can you afford the maintenance? You’ve got to pay HOA fees (depending on what type of house you want to purchase), yard care, utilities, tax, and insurance. These all add up to a lot of money, together. Each individual expense doesn’t seem like a lot, but once they are all combined, the monthly fees are very expensive. See: What to Know About Renting Versus Buying a Home.
Can you afford a down payment without having to tap into your savings account or emergency fund? If the answer is no, keep renting. You don’t want to spend every dime you have in order to buy a house. An emergency fund is not a down payment fund for a house; its for actual emergencies. Also ask yourself if you can afford to pay for any surprise repairs. It’s very important that you have lots of money saved up when you buy a house. Things happen over the course of home ownership, and you don’t want to go bankrupt by owning a house. See: Rent vs. Buy Calculator – Bankrate.