America. Land of big and bigger. Land of you must have the "American Dream." Unfortunately many are misinterpreting how to go about that American Dream. That dream of owning a home and no longer renting. Each year there is always a national discussion between renting an apartment and buying a home. The argument is always "I am tired of giving my money to someone else when I could be paying for something that I own!" Trust me there is nothing wrong with wanting to own a home, but this can not be your reason. This type of reasoning will land you in a financial nightmare.
I know there are pressures all around you. There is the pressure of a society that says everyone should have a home. The pressure of that parent that asks "when are you going to get a place of your own?" The Fed Chair has decided to start raising interest rates and that in turn will raise mortgage interest rates. All of this pressure will make you jump into a lifelong decision. That lifelong decision is not cheap and not easily undone.
When you rent an apartment you are able to set your own terms. You can sign a lease for a month, six months, or a year and when that lease ends you can leave. You can even leave before, and as long as you pay the rest of your lease there will be no legal problems. For example your apartment is $1000 a month with two months left on the lease, but you landed a new job in another state. You could pay the $2000 left on the lease and move on to your new life.
Take the same situation with a house. It does not matter what your monthly payment is, you are going to have to sell that house or pay it off if you want to move on to that new life. In the past (before 2008) it was very easy to sell your house and move, but now that is not a sure bet thanks to the financial crisis. You could end up owing more for a house than it is worth or be in a position where no one is in the market for a house. In any of these situations you lose!
What if you want to buy a home and stay in it for the rest of your life? You have to go into it knowing that everything is up to you. When your toilet breaks you will call the plumbing company and pay to have it fixed not the apartment complex. When there is storm damage to your property you will be calling your insurance company and paying a deductible not calling the maintenance man to come fix it for free. You will discover what property taxes are and the high cost of property insurance. You may get to know homeowner association fees or county taxes. You will get to know a lot about owning a home that many before you never told you about!
Like I said before I am all about having your own home, but it needs to be for the right reasons. Maybe you are tired of living under noisy neighbors. Maybe you want a yard for your children to play in after school. Maybe you found the perfect foreclosure in a great neighborhood. Maybe you have saved enough money for a downpayment. Maybe you have a fully funded emergency fund just in case something expensive happens. Whatever your reason is it has to be better than "I am tired of throwing my money away with rent."
A house and the mortgage that comes with it is not something you just jump into one day. It can make or break you financially so make sure you are not rushing into a mess!
As for me right now I am dealing with a kitchen light that has three switches on three different walls and it is malfunctioning. I don't know which switch will turn on the light. Who is going to pay to fix that problem? I guess me. (Sigh)
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