Everyone in your grad class is purchasing new homes, so you are wondering if you should follow suit or continue renting. Well, whereas it might appear classy to own a home, it isn’t necessarily a wise financial decision for you. In fact, you probably aren’t ready to be a homeowner. To help you understand this seemingly harsh reality, here are 5 reasons why you are not ready to stop renting:

  1. You aren’t ready to be tied down to one location

Are you excited by the prospects of taking on new adventures, careers, challenges, and relationships? If you are, then what you need is the flexibility to move and live wherever life takes you. That flexibility is only attainable through renting. Owning a home will force you to settle down in one location, pretty much for the rest of your life.

If you are thinking of buying a home and then selling it as soon as an exciting relocation prospect comes up, you probably should rethink that decision.

According to real estate experts, buying a house isn’t a viable short-term investment because houses are expensive to buy and surprisingly expensive to sell. Every time you sell your house in order to relocate, you will have to pay a broker commission which can be as much as 5% of the home’s purchase price, a city real estate and state transfer tax which can be up to $4000-$5000 in some states, as well as other closing fees. And since you will be relocating a lot, these costs can accumulate to unimaginably huge figures. However, if you already bought a house, you can always rent it. There are plenty of websites where you can list your property.

  1. Your emergency budget is insufficient

Renting a house exempts you from sorting costly maintenance and repair costs – that’s for the landlord to worry about. Owning a home, on the other hand, obligates you to fix structural and safety problems as they arise. That is why every homeowner needs a sizeable emergency home maintenance budget at all times.

Think of a case where you are a homeowner and then the smoke/carbon monoxide detectors stop working, the water pipes burst, the heater breaks, or a hurricane damages your roof. If your insurance provider doesn’t cover the resulting repair costs, will you be able to pay for them from your pocket? Remember that some of these expenses can be outrageously huge. If your available emergency budget cannot cater to a sudden $10,000 expense, then you probably aren’t ready to own a home.

  1.     You aren’t guaranteed of a paycheck a decade from now

Job security is an important prerequisite for owning a home. You will only keep up with your payments if you have a stable income throughout the payment period, which is mostly 10-30 years. It doesn’t matter if you can afford the required down payment as of now or whether your current credit score allows you to buy a home; if your job security is in doubt, please hold your horses.

If you are a freelancer or part of a Gig economy, create a sustainable, reliable, and steady client base first before thinking about a real estate investment. If you are employed, be sure to assess your professional value in the company. Would you be a victim of cutbacks in case of future financial problems in the company? Is your position/skills core to the day-to-day operations of the company? These are critical questions that will tell you whether or not you have a future in the company.

  1. Your total debt load is unreasonably high

Even if you have job security and your credit score is fairly okay, you are not ready to stop renting if there are excessive debts under your financial accounts. Maybe your salary is sufficient to afford the down payment and to service the resulting monthly mortgage, but if your spending habits are threatening to max out your credit cards, you definitely cannot risk any more debt. Sort out your current financial mess first.

  1. You aren’t quite ready for joint investment with your partner

The good thing about renting is that in case you fall out with your partner, you can easily go your separate ways without the baggage of joint investment. But if you buy a house together, there is the likelihood of a legal tussle between the two of you when determining who gets to keep the house. So, are you prepared to lose your family home in case of a divorce? If you aren’t, renting is still your best option.

Maybe you just got married or are planning to marry soon. Is your significant other’s dream home acceptable by you? Do you both agree on where to live, be it in a city, suburb, countryside, or a small town? How big a house do you both deem suitable? What about the décor; are your tastes sync? Unless you can both agree on every little detail regarding the stature and location of your future home, don’t risk buying it now.

– This is a guest post not written by the site’s owner.

 

 

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