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Home ownership represents the American Dream! It means having control, success, and excellence. However, there are several reasons why you should hold off on buying:
1. Buying is more expensive than renting: In the college town that I rented a house in, my rent was $650 for a three-bedroom house. Yes, I probably could have bought a house and had the mortgage payment be far less, but there are most costs to home ownership than just the principal and interest. There are taxes, insurance, maintenance costs (including buying a lawn mower and tools), as well as all of the stuff you will “need” to fill up the house. Home ownership is no easy adventure.
2. You need to move in the near future. If you (or your spouse) are in the military, college, or another profession in which you move around a lot, buying a house may not be for you. Most experts recommend owning a house for at least 5 years before selling in order for it to be worthwhile.
3. Your credit needs work. If your credit score is below excellent (720), then chances are you will have a higher interest rate from the bank, which means you will pay more interest on the loan. Worst case scenario is you are denied the mortgage! You do have the option to pay the loan off early, but let’s face it, most people do not have the discipline to do this!
4. You cannot put at least 20% down. When you put less than 20% down on a house, you are charged Private Mortgage Insurance (PMI), which can add up to hundreds of dollars in premiums each month. More money = bad!
Even though house prices have dropped and interest rates are at an all-time low, all of these are reasons to raise a red flag before you decide to buy a home. A home is more than just a mortgage payment – be it positive or negative and is not something to be taken lightly.
This Post was included in the Financial Carnival For Young Adults @ Save and Conquer
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