5 Reasons Why Home Ownership Might Not Be For You
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The following is a guest post from Jen of Happy Little Homemaker.
My husband & I are in the midst of trying to sell our home. In Michigan. We’ve wanted to sell it for years…and we only built it six years ago! Before we built, we were in the cheapest apartments in town. It wasn’t the greatest neighborhood (nothing like a big city, but annoying nonetheless)– the apartment was small and dark with a tub that wasn’t deep enough to cover my thighs. We couldn’t WAIT to get out.
Now we can’t wait to sell! Over the last 6 years, we have learned that home ownership isn’t (and probably shouldn’t be) for everyone.
Do you have a nest egg?
Most importantly, you need to have a nest egg before you purchase a home. Dave Ramsey says that you should be debt free and have 3-6 months of living expenses before you start saving to buy a home. You should put down at least 20% and the remainder shouldn’t be more than 25% of your take home pay on a 15-year mortgage. Do you have $50,000 in the bank? If not, the timing isn’t right.
What is your 10 year plan?
When we were in college, we didn’t know what we wanted to do or where we were going to be in 10 years. So why buy a piece of property in a place you might not be in? Do you have kids yet? Will you both work when you have kids? These are all factors that might lead you to decide that owning a home might not fit into your long term plans.
What do you do for a living?
I read an article recently that the average person in my generation changes jobs every 3.5 years. I have listened to Dave Ramsey talk to people who have a house, move for a better employment opportunity, and are stuck with a house in a state they no longer live in. Worse yet, some people repeat that mistake and have several houses they can’t get rid of. Who wants to miss out on a great opportunity because you are chained to a house?.
Elderly Family/Parent’s Illness
Many fall into the “sandwich” generation; those people who are taking on the monumental task of caring for their burgeoning family, as well as their aging parents. People frequently move back to take care of their parents or bring mom or dad to live with them. If you do not own a house, you can go to them, or get a different place, as circumstances dictate.
Travel
It truly IS a small world and it’s no longer a once in a lifetime event to travel halfway around the world. What if God calls you to mission work on other continents? What if you decide to move to Italy like Rachel @ Small Notebook? It’s also not out of the question to go somewhere to visit and love it so much you would like to move there. Why saddle yourself down to a house if that is an option you are open to or actively looking for?
This world is full of options and possibilities and it’s impossible to know what your life will look like. I try to be able to embrace change and adventure by keeping my life as simple and flexible as possible so when the opportunity comes up, I can say “YES!”.
What would you like to be able to say “YES!” to if the opportunity arose?
Jen writes about simple living and the nitty gritty details of embracing her vocation at Happy Little Homemaker. She has also started a new product review blog (Happy Homemaker Reviews) focusing on ways to save your time, money and sanity! Jen is a proud wife and mother to two little girls…so far.
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Excellent article. When I use the Dave Ramsey mortgage calculator to see how much interest we would be pay if we took out a 30 year loan with just 20% down it makes me cringe. A $220,000 home (starter home, in our area) would result in paying $187,000 in interest alone. If we keep living in our small (cheap) apartment for 5 or 6 years and continue to save to put down 40% on a 20 year home loan we only pay $85,000 in interest over the period of the loan. That’s a savings of $102,000 in interest!! Even when factoring in our rent for the next 5 years (about $40,000) we still end up saving $62,000 total. $102,000 in interest saved – 5 years rent = 62,000! When I look at it this way it’s a no-brainer for us! It’s easy to get into a mindset that buying a house is what we’re supposed to do when we’re newly married and it isn’t always the right thing for everyone.
@Amber, Thanks for sharing your numbers! That’s so helpful to making the point–I was already long winded 🙂
We have been renting for the past 4 years during which we have had 2 job changes and 2 moves (one long distance). We continue to rent as we finish our Emergency fund and start saving for a down payment.
But every time we get house fever and start thinking about jumping the gun, inevitably some major repair has been needed on our rental. Then we both give a big sigh of relief and give thanks we are renters and not homeowners without an emergency fund.
I’ve never really thought much about the benefits of renting versus owning. During the years we were renting, I just couldn’t wait to get into my own home. Interesting post.
Great article! My husband and I were just discussing this as we prepare to sell our house… This was especially insightful as we might move to CA!
@Jennifer Ott, Thanks! I wish someone had challenged us before we built!
With that criteria, half the people in this country would still be renting!
@Susie’s Homemade, I don’t think so. I think the market would change entirely because it would be built on real money not credit and leveraging. It would be a different world for sure, but I have no idea what it would look like.
@Susie’s Homemade, Or building/buying smaller homes. At 2000 sq ft, mine is twice as big as the house I grew up in. And I had no kids when I built it.
Great article, very thought provoking. 10 years ago, we Americans thought we had to own a house. Banks and mortgage companies helped everyone be able to “afford” it. Soon housing prices, especially along the coasts skyrocketed. Then the bubble burst. Prices plummeted. But the debt didn’t. Foreclosures skyrocketed. All because we were too greedy and impatient to wait until we could truly afford it.
$50,000 is not unreasonable to have in savings for an emergency fund. If it is, you probably can’t afford a house right now. 25% of take home pay for a 15 year mortgage is not unreasonable. If it is, you probably can’t afford a house right now. When you calculate costs of rent vs. ownership, be certain you pick up all variables: rent, utilities, and renter’s insurance vs. mortgage payment, utilities, homeowner’s insurance, property taxes, repairs and maintenance and cost of selling (life happens, folks) for the anticipated time in the home. It isn’t a guarantee.
Just because the Jones act like they can own a home doesn’t mean you should. When (if) you do purchase a house, let it be an investment decision before an emotional one. Buy less than you can afford. And do not listen to the advice of your banker/mortgage broker/real estate agent. They have a vested interest in persuading you to spend more.
@Kathleen K, Excellent points! Thanks for sharing.
People need to remember to factor in things like property taxes, higher utilities, home repairs and yard maintenance in the cost of purchasing a home. Not long after we moved in our hot water heater needed replaced. Although I am grateful for my home, I sometimes wish we would have rented longer, saved more and enjoyed being able to call a landlord when a problem arises.
You made some good points! I always thought of renting as “throwing money away” in a sense… But if you aren’t going to stay in a house until it’s paid off, then you kinda are doing the same thing. Although, buying and selling can be a way of making an investment and earning money in the right economy…. Anyway, thanks for the insight! 🙂
We moved to Southern California a year ago and have been renting. At first we thought it would be temporary–just to get to know the area before we bought a house. We owned a home in Ohio for 10 years and thankfully sold it before we moved here. I loved our old house, but it did come with its headaches! We have begun looking at houses and every time come back to the fact that we love renting. We are paying $1,000 less a month then we would on a mortgage here (not only are prices high, but then you have to add in HOAs!). We don’t have to worry about anything breaking or wearing out-just call the landlord. We love our condo and the location. Thanks for a great article that confirms my suspicions about what we should be doing right now!
@Deb, Wow! That’s quite a gap between renting & owning. Thanks for sharing.
I am sick of hearing people quote Dave Ramsey. Sometimes, a little common sense is needed. What will the cult of Ramsey do if he ever declares bankruptcy again…….there is a quote”never, never pin your faith in one human, not if he is the best and wisest in the whole world. There are lots of nice things you can do with sand, but do not try building a house on it” (C.S Lewis).
@Theresa, absolutely. And while our family has followed Dave’s suggestions to get out of debt successfully, I personally don’t agree with everything he says.
But, Dave Ramsey isn’t the only one saying these things. Most economic advisors recommend paying down debt and having an emergency fund.
That is common sense.
@Theresa, You have a point–no one should blindly follow everything anyone says. As a culture, though, we have had poor spending habits & it’s translating into government. I don’t think it (gov’t) can get better until we do.