Yes, a real estate professional is telling you NOT to buy a home this year… that is under certain circumstances. Buying a home right now (in this hot market) is a good idea, unless you are in a few certain financial positions. What are these positions? Well, I am listing them below;
1. You have a new job in the same career. If you are an expert in your industry but you are less than two years on the job with a certain company, you may want to rethink the bid you are going to put on a home. Think about the job market right now. You may have plenty of money in the bank, but what happens if the job doesn’t work out? I suggest you make sure your new role works out before taking on the financial responsibility of owning property. You don’t want to blow through your savings on a house you can no longer afford. Just imagine that after a month or two on the job, both you and your employer agree that your role just isn’t a good fit. Do you really want to be tied to the home you are looking at?
2. You can’t afford 20% down on the home. I know, you can get a home with virtually almost nothing these days, but this doesn’t mean you can afford the home. For me, you should be able to afford 20% down on the home right now in order to buy it. Now, this doesn’t mean you will put 20% down on the home, but you should have this amount in cash flow before you buy it. Also, remember, PMI is a factor. PMI makes it even more difficult to keep up with housing payments.
3. You have no emergency fund. Home ownership comes with emergency situations. If you’re not financially prepared to deal with these emergencies, buying a home right now is not for you. Think about what happens if you own a home for two months and the water heater goes out? Maybe the AC unit fails? Perhaps something major happens and the repair is close to 10k. What do you do?
Owning a home is a great investment, but don’t leap before you look. Understand the risk in all you do.