The following is a guest post from H.D. Carver at Your Finances Simplified. Please join me in welcoming him to the blog today!
I recently read a blog post attempting to reduce the home buying decision to a mathematical equation. While efforts to reduce momentous financial decisions to numbers, statistics, pie charts and formulas are laudable, they leave one exposed to the possibility of drowning in a lake with a mean average depth of three inches … a fate I would prefer to avoid!
Other Factors to Consider
It is difficult to argue against the prudence of thoroughly vetting your financial circumstances as a precursor to making any decision regarding buying a home. As a first step, determining affordability makes perfect sense. However, many other factors should be considered before you make the leap to home ownership. A few of these other factors include …
Understanding Why You Want to Own
As Americans, we have grown up with the construct of home ownership as the ultimate expression of the American way of life—the American Dream. It is important for anyone contemplating home ownership to perform some honest introspection. Be certain that home ownership is, in fact, your dream and not something you perceive to be an obligatory act, civic, or patriotic duty. Post World War II, housing shortages were a fact of life and a driving force behind that generation’s aspiration for home ownership. We are in radically different times now. In short, make sure this decision is based on what you want and not on what you believe societal norms demands of you. One man’s treasure is another man’s trash.
Will Your Job Force You to Relocate?
Even though the numbers add up and you genuinely want a home of your own, working in a job with high relocation probabilities should give you pause. I bought my first home at 21 and seven short months later was faced with the decision to decline a promotion or sell my home. I was fortunate and broke even on the sale, but that is the exception … not the rule. If your line of work demands periodic relocation or if promotions hinge on relocating, home ownership may not be for you at this point in your career.
Owning a home introduces additional stress into your life. If the plumbing springs a leak, the water heater craps out or the furnace goes on the blink, it is your problem. No more quick phone calls to the building super or the landlord … it’s all on you pal. How do you feel about the great outdoors? You’ll be spending a lot more time outside handling lawn care, cleaning gutters and shoveling snow. By the way, how much does a lawn mower cost?
Of course, there may be stresses that you escape with owning your own home, but they pale in comparison to those you acquire. You need to ask yourself if you have the disposition to deal with these added aggravations.
Home Ownership as an Investment
If there were any lessons to be learned from the 2008 financial crisis, it is that real property, particularly a single family home, as an appreciating investment, is no longer a certainty. Ask the thousands of homeowners with upside down mortgages. If investment is the driving force behind your desire to own a home, you may have better options.
Two Income Households
If the formula alluded to earlier was predicated on your income plus the income of your significant other, you may want to reevaluate things based on the stability of your respective employment. After all, if your job or your significant other’s job lacks a high degree of stability, you may be setting yourself up for a financial catastrophe. Consider waiting to buy; using that second income to increase the size of your down payment to a point that allows the mortgage payment to be serviced by one (surviving) income stream.
People with stable and meaningful lives will have stability and purpose with or without home ownership. Home ownership is neither a precondition to happiness nor a guarantee. Germany, for example, has very low rates of home ownership, but millions of its citizens enjoy fruitful and happy lives.
Make sure that when you’re considering home ownership you set yourself up for the American dream rather than a financial and emotional nightmare.
H. D. Carver is an American who currently resides in Cagayan de Oro City, Philippines. He has years of experience in the financial services sector and has served as a manager for Fidelity, as the vice president of a large regional bank, as the president of a financial services company, and as the Manager of Administrative Services and Support for the Aon Corporation. He has worked as a freelance writer for 4 years. Currently, he writes for Your Finances Simplified.