Owning a home seems to be a large part of the American dream. However, home ownership is not for everyone. The costs of home ownership extend beyond just making the monthly mortgage payment. You will need to make repairs, pay taxes, and do all the upkeep yourself. If you are not ready for the responsibility of home ownership, or are having trouble managing your current budget, home ownership may not be right for you. Ask yourself the following questions if you are trying to decide whether to rent or to buy.
Your lender might have given you a great quote on a mortgage, but that is not the end of the story. You will need to factor in property taxes and insurance to your total costs. If you plan to move into a community with a homeowner's association (HOA), you will need to figure in HOA dues and periodic assessments for repairs into your budget. When you are a home owner, you will need to pay for repairs to the plumbing, air conditioning, and other forms of upkeep that you are not responsible for when you rent a house. If your rental includes water, trash, or cable service, you need to add those costs into the total cost of owning a home as well.
When you rent, you probably don't have to mow the lawn or spray for weeds. Your rental complex might have a pool that someone regularly keeps up for you. When you buy a house, the responsibility of mowing the lawn, spraying weeds, and keeping up the pool (if you have one) falls on you. If you are handy, you might want to do these repairs yourself. If maintenance is not your thing, you will have to pay to have someone come in and do this work for you. Don't forget that your house will also need to be repainted periodically, leaves will need to be raked, and if you live in a cold climate, snow will need to be shoveled.
If you are in the military or work in an occupation that requires you to move a lot, now might not be the best time to buy a house. Home loans have closing costs to them. If you need to move in a couple of years, you will probably lose money on these closing costs. If the housing market falls, you may find that you have negative equity in your home when you try to move, and will not be able to sell your home without paying cash to get out. If you are in a situation where you have to move a lot, set some money aside, so when you are in a better position to own a home, you can come up with a larger down payment.
If home ownership doesn't make sense for you right now, you can still prepare to own a home some day. Save some of your income to help pay for a down payment on your home. The more money you can put down on a home, the more affordable it will be when it is time to buy. If buying doesn't make sense because you move a lot and you start saving today, you will be in a great position to buy once your career settles down.