Ever since we finished college, many people who love us (and some who don't) have told us that buying a house is our next step in life. While I know they mean well, I'd like to combat some myths about home-ownership, as well as explain why buying a home isn't right for us just yet.
Myth #1: You buy a house now to get tax credits.
That's kind of like saying "I'll give you $3000 if you give me $10000." (To steal from Dave Ramsey). What we would be paying in interest would never make up for what we would save on our taxes.
Myth #2: Don't waste your money renting!
A little math for you: If you take out a $165,000 loan for a home at 4.75% on a 30 yr fixed mortgage (rates are low now!), your monthly payments would be about $860, and you would pay about $145,000 in interest. Now, let's say we live cheaply and pay $800/mo for rent for 5 years. During that time I would be paying about 45,000 on rent. But I would have been paying $37,000 in interest on a home. If, during that time, I save for a sizable down payment, I will save $$$ later on mortgage insurance and interest.
Rent isn't wasting money! You are exchanging money on a place to live. And you don't have to be responsible for routine maintenence.
Myth #3: You are building equity, which is good.
Really? What if my property value decreases? A home is not an investment, or, at least, it's a risky one. A home is a place to live.
Reason to wait #1: no money!
We want to have a large down payment. Like 100%. That may be unattainable (imagine saving $1000/month for 15 years!), but we will have at least 20% down before we buy a home, so that we won't have to pay mortgage insurance. We want to own at least a little bit of our home when we buy it. If we do finance our home, we'd like to do it with a 15 year mortgage.
We also have a student loan that takes a few hundred a month away from our income!
Reason to wait #2: Uncertainty
We are not sure where the next 2-5 years of our lives will take us. With this economy, who knows how secure anyone's job is? The last thing we want to do is buy a house and then be stuck with it should we move/lose a job! It just isn't the right time for us.
Reason to wait #3: No crappy house for us
Why would we rush such an important decision? When we DO buy a house, and we will, we want it to be a home we enjoy. A place we want to stay. And we don't want to fix stuff up!
Reason #4 to wait: We're not worried.
Interest rates are incredibly low right now. (But banks are not really lending either!) Home prices are also dropping. Who knows, the prices may double by the time we look into buying. But oh well. If it's not right, it's not right!
Buying a home is a great opportunity, and for those of you who have already done so, that is great. We can't wait to buy a home, but there are reasons why we aren't even looking into it yet...