Despite what you’ve heard, buying a home is not for everyone. Pre-Depression, many people who shouldn’t have purchased homes in the first place, went against their better judgement by doing what “so and so” said they should do and ended up worse off for it.
The old-school home-buying rules (well, not your granny’s old school, more like 7 years ago old school) told us:
A. To buy as much home as we could afford, ahem, qualify for, with as little money down as possible.
B. To buy the biggest McMansion in the neighborhood so everyone would know we “made it.”; or
C. We’d always make money, because homes “always appreciated.”
Now that we know how awful that advice was, what do we do? Well, it’s time to figure out if you happen to be one of the people who probably shouldn’t be buying a home right now.
Here are five personalities who may want to wait before they buy:
1. The Wanderer. Don’t buy a home if you don’t plan on being there for more than 5 years. What’s the point? 99.999% of your monthly mortgage payment will go towards interest and barely scratch the surface on your principal. Considering the amount of money it will take to get into the home and then maintain it, if you only plan on sticking around for a few years, then save yourself, your sanity and your wallet the trouble and just rent until you think you’ll stay for a significant amount of time.
2. The Naive. Don’t buy a home if you don’t understand the market in your area. Who cares what economists say about the housing market nationally? That’s a great place to start, but please don’t stop there! It’s important to understand the city in which you live. Every market is unique. Research the stability of the local job market with a specific interest on your potential industry or those you may be interested in long term. Check local foreclosure statistics. No matter how cheap your house was, if folks keep foreclosing at rapid rates, you may still stand to lose money in the long run. Analyze how long homes in your area of interest stay on the market. If homes similar to those you are entertaining don’t seem to resell well, then you may consider changing your criteria.