There is an exception to every rule, but the average person should not buy a home. Below are 5 major reasons to reconsider the idea of home ownership.
1- Maintence Expenses
Even with a new home, there are always things to fix, remodel and maintain. The things you can do to a home are unlimited, therefore owning a home is a never-ending project.
If you want to properly keep a home and not let it slowly deteriorate, then you’ll need to spend approximately 3% of the purchase price of the home. If a house cost 300k then you’ll have to budget around $9,000 a year in maintenance.
There will always be something to repair, improve or remodel. Most homeowners will spend most of their weekends in home improvement stores, working in the yard or doing something that involves upkeep.
2- It’s a Liability– A liabiliies cost you money. An asset is something that pays you. Examples of an asset would be owning a dividend paying stock or an apartment building.
Dividend stocks pay you money every month or every quarter. A 30-unit apartment building pays you money every month. Those are assets.
In the USA, you must pay local property taxes forever. You never fully own your home even if you pay off the mortgage. Annual property taxes usually always go up annually.
3- Anchored to One Location
A single-family home is not liquid and keeps you anchored to one location. One of the keys to wealth and happiness is having options and freedom. The more flexibility and mobility you have the better.
You may discover better lifestyle or economic opportunities available in other regions of the country or world.
Most people don’t stay with the same company in the same location for 30 years like in the 1960’s. The economy is more dynamic and mobile than ever before.
When its time to move, a single family could take several months to sell depending on your local housing market. Some Neighborhoods can also change and become undesirable over time.
4-Less Free Time
Your time is arguably one of the most valuable things you’ll sacrifice when owning a home. Most people only get two days off a week. Those precious Saturdays and Sundays will be spent on do it yourself home repairs, remodeling and lawn maintenance.
Weekly house chores take away from vacation, leisure and side business time. You may find yourself spending that 7-day vacation at the home working on some home improvement project rather than out of town discovering new cities, beaches and cultures.
5-Overpriced
Home prices have been over inflated since 30 year mortgage easy financing has been made available. A house will cost you a lot more than the initial asking price. Mortgages are scams and make people slaves to the lender.
A $300,000 mortgage house will end up costing extra $230,000 in interest expense over the term of a typical 30-year loan. Not to mention the $180,000 in maintenance, $60,000 in taxes and $30,000 in home insurance over 30 years.
Mortgage interest can be tax deductible, but it still doesn’t make home ownership profitable. Imagine if someone invested that money in blue chip dividend paying stocks. He or she would more than likely become a millionaire and have a lot of passive dividend income to live off.
A $300,000 house could end up really costing more than $750,000 over 30 years. So even if your home doubles or triples in value, you are still losing money overall. Add even more money when you count neighborhood association fees that many communities are now collecting.
Even when a home is paid off, local property taxes, maintenance and home insurance bills will still come due.
Buying a home is not all bad if you can truly afford it and are sure you want long term roots in a certain location. Saving to pay it fully in cash would be best. Possessing a home is a privilege not a right. Having a house is a luxury not a necessity. Most people should rent.
If you can’t put at least 80 percent down and pay the remainder off in less than 10 years, then you probably stretching yourself too thin. You don’t want your dream home to become a financial nightmare. You don’t want the home to own you. This is ancient wisdom.
Luke 14:28 says “Who would begin construction of a building without first calculating the cost to see if there is enough money? You might only complete the foundation before running out of money and everyone will laugh”.
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