Why Delay The Purchase Of A House?
Buying a home is one of the best investments a person can make in their lifetime and homeownership is a goal for the vast majority of the population. Besides the thrill of living in a home that they actually own, homeowners have the added benefit of watching the considerable investment they made in their home grow. This is because the real estate industry is consistently growing due to the fact that shelter is one of the few basic needs that humans have.
Besides the long-term economic benefits to homeownership, owning a home also allows for short-term economic benefits that come from income tax savings. Due to income tax deductions, you are able to view buying a home as being partially subsidized by the government. Property taxes can be steep but the property tax rates and the interests can be deducted from your gross income as a way to reduce your taxable income. Additionally, by owning a home, you will be able to avoid the vicious cycle that renters find themselves in. Renters pay a set sum per month that can increase each year in order to live in a home that they do not own. Homeowners pay a stable monthly housing cost that is dictated by their mortgage. Although it may take some time, these monthly fees are going to pay off the mortgage, which will eventually be paid off. Once the mortgage is completely paid off, the homeowner is able to rid themselves of the monthly housing costs that renters are constantly finding themselves having to deal with.
Times To Delay
Despite the numerous financial and personal benefits to homeownership, there are some times when it is in your best interest to delay the purchase of a home. Although some people may ask, "Why delay the purchase of a home," there are a number of reasons why you should not rush into homeownership.
Take the example of Shirley, a Boston medical student graduate who bought a ranch in New Mexico after she had recently acquired a job in that area. Growing up in the East Coast, Shirley was excited about the numerous opportunities and challenges that moving to New Mexico would present. Understandably excited, Shirley decided to fulfill one of her major dreams of buying a ranch just outside of Albuquerque.
Using the money she received from her inheritance, Shirley decided to put a down payment on this ranch. Thrilled about the opportunity, Shirley moved to her ranch and quickly began her new job. Two weeks into her job, Shirley realized that she was not thrilled about how she was being used at her work. Despite her extensive years in medical school, Shirley felt that her expertise was not being fully utilized. In addition, Shirley was becoming increasingly homesick for the East Coast way of life.
During this time, Shirley began to scan the want ads, mainly out of curiosity. This curiosity soon developed into a fervent job hunt where Shirley was contacting possible contacts in order to learn of any potential job openings. One job opening soon appeared in Rochester, New York and Shirley found that the job was hers if she wanted it. Confronted by this dilemma, Shirley decided to leave her job in New Mexico to start this new job in Rochester. A wise personal decision, Shirley soon found out the hard way about how homeownership can limit her financial opportunities.
Unable to quickly sell her ranch for the same price that she paid for it and saddled with hefty mortgage payments, Shirley decided that there was only one thing that she could do. She bit the bullet and sold the home for less than what she paid for. Although she was able to pay off the difference in her mortgage, Shirley soon realized that she would have been in a better position if she had delayed the purchase of a home.
Considering Shirley's financial circumstances, she made the right choice in acting in a way that made sense for her personally as opposed to making the choice that made sense financially. However, many homeowners are unfortunately not in the same position as Shirley. They find themselves stuck to a place or a particular situation due to the presence of their mortgage debt.
Therefore, it is important to consider the magnitude of the commitment that you are making when you are buying a home. Although this may seem overly dramatic, it is better to be too aware of everything that can occur when you own a home than it is to be unaware of some of the potential risks of homeownership. So, it is important that you take some time to reflect on whether homeownership is the right thing for you to do at this exact time.
A Major Commitment
Buying a home is a huge financial and personal commitment that yields substantial rewards that outweigh the sacrifices that you have to put into it. However, it is essential that you understand the extent of what you will have to sacrifice in order to buy a home. Financially, it is important that you have the economic resources to pay monthly mortgage payments until your mortgage is finally paid off. Lenders spend a considerable amount of time protecting their interests in their mortgage loans and will not allow homeowners to leave their mortgage obligations until they have been completed. The worst thing that could happen for a homeowner is to buy a home and then lose their source of income. After three missed mortgage payments, your loan source can initiate the foreclosure process, in which you will lose your interests in your own home. Besides losing homeownership, you will be obligated to pay off the remaining amount of money that is left on your mortgage. Also, foreclosure is arguably the worst thing that can happen to your credit history. Therefore, you should be willing to protect your financial interests in your home by making sure that you will be able to fulfill your mortgage obligations.
Also, although homeownership is an excellent financial investment, the financial benefits to homeownership develop over a long period of time. This is because land and property takes some time to appreciate in value. Considering the large financial investment that one has to make initially when buying a home, one of the situations that homeowners want to avoid is being forced in a situation where they have to sell their home too soon. Closing costs and real estate commissions can be considerable when buying a home but eventually the appreciation of the land and property will financially cover these one time costs. However, by having to sell your home before reaping these long-term fiscal advantages will put you in a financial bind. This is particularly true to those homeowners that bought a home with a down payment of 10% or less.
Non-mobile Possession
Additionally, homeownership means that you own a considerable possession that is locked in one location. Your mobility is limited and you should be aware of this before buying a home. Make sure that your home is located in a neighborhood and a city that you enjoy, as it is difficult to move away from a place that you don't like when you own a home in that place. Also, be aware that career opportunities will not be as easy to pursue once you own a home.
For example, Lenny was working at a graphic design firm in Omaha where he had been slowly producing a reputation as an innovative designer. An ambitious man, Lenny had moved from New York City to Omaha after one year of graphic design school to seek an opportunity working within an exciting graphic design community. Full of ideas, Lenny had been living for three years in Omaha when he spotted his dream home.
In the one-story, three-bedroom house that he spotted, Lenny envisioned a sprawling studio apartment that would help inspire his work. After taking out a considerable home loan from a bank, Lenny began to go through the long process involved in buying a home. Once the home was his, Lenny was extremely happy. That was until the day he met a girl from San Francisco who told him of a wonderful opportunity that was open in a growing graphic designs firm. Hearing of this opportunity, Lenny had the itch again to relocate to a different part of the country to further his career. However, after looking at his financial situation, he soon realized that making this move was not going to be possible due to his mortgage commitments.
To avoid a situation like Lenny's, it is important for a homeowner to feel attached to the city that they are planning to live in. When you buy a home, you should be prepared to live in that home for a number of years. Consequently, it is important that you assess where you currently in your life compared to where you view yourself in the future. Make sure that your future aspirations will coincide with owning a home, because owning a home will mean less flexibility both financially and personally in your life.
Therefore, it is important to look at a number of factors before buying a home. Delaying the purchase of a home is usually not the best financial decision because you can miss out on a great deal. This is because land and property are practically guaranteed to appreciate over time. However, it is sometimes important to delay the purchase of a home if homeownership does not fit into your life plans at this current time. It is important to consider a number of factors before choosing to buy a home. By doing this reflection, you will be able to avoid any situations where you regret owning a home and also you will enhance the enjoyment you will receive when you buy a home.
