5 Lifestyle Dilemmas That Deter People from Buying Homes

Buying a home is often considered a great lifetime achievement. It easily becomes the center of attention when people talk about investing and the site of various memories they want to create in their choice of living spaces. Considering that houses cost more money than many people have had in their checking and savings accounts at one time, it makes sense that many people feel ill-equipped to purchase a home. Still, buying a home does not have to be out of reach for so many people.

Lifestyle choices can get in the way of purchasing a home. Getting a plan together to make it happen should accompany some financial literacy for better results. Here are five dilemmas that pose as obstacles to people buying their first home:

1. The Relocation Dilemma

If you want to have a nice house, you can simply find one in an area in which you can buy. That may be in a different state if you lack opportunities in your current area. Economic and cultural norms in various cities and states are attractive many prospective home buyers. In other locations, typical wages may be so low that it is not worth the move if you know you will get paid less. That economic impact can prove to be a deterrent to owning a home in a different area just to say you own a home.

For those of you who would rather find something nearby, start looking. Go online and get an idea of the landscape. Do you see any houses on the market in the locations you want? Take a week to look and write down those criteria and the addresses of those houses. Another action step is to contact a realtor who can tell you where the houses are that meet your criteria. They can even take you to see inside them. This is a good exercise to get familiar with the houses on the market and what is in the area, even how to get around. Realtors may even know of some houses that are not on the market simply because they have other prospective sellers or know other realtors selling for their own clients.

2. The Single Family Dilemma

When people talk about owning a home, they often talk in terms of single family houses. Meanwhile, multifamily houses are on the market for the same prices as single family houses. The price of a duplex, for example, is the dependent on the same criteria as a single family house: square feet, number or bedrooms and bathrooms, etc. Duplexes (which have two units) allow you to live in one unit and rent the other. This provides you regular income and other benefits (see The Tax Dilemma below). Your mortgage may still be high, but someone else is helping you pay it, so it is not going to cost as much as it would. Some people do not want tenants, and that is a lifestyle decision. But, here are three reasons when you should consider making a multifamily house your first home:

You want income now. Mortgage payments are offset by the income a tenant pays, counting as income. This is also one great way to remain in a more expensive area.
You don’t mind living in a smaller place for now to move into a larger space later. If you buy a duplex the same amount of square feet you would have bought for a single family house that means your unit will be smaller than if they were combined. Moving into a larger place in your subsequent home may bring with it an easier transition if you do not have to downsize.
Reduced interest payments. Making the multifamily house your primary property can help you lower loan interest payments. Starting in a multifamily unit allows you to make your subsequent home your primary home, keeping interest costs down.

3. The Down Payment Dilemma

Let’s not forget the closing costs. Having money up front is important just to get a preapproved loan. Although, the amount of money you need seems to be a barrier for many people. If $15,000 seems too much even if you relocated, then you may not want to wait until you get 30K, and that is a lifestyle choice. But, if you did wait, consider this: make more money. Get an additional job, change your job for a higher wage or learn how to sell items online for $500/month extra in profit. If you put that money into an investment vehicle that gives you compound interest, you can improve your growth opportunities. But, you will have to get some more money anyway, so consider the many ways you can do that.

You do not even need money if you have assets worth money. Buying a condo and trading up to a single family house is one way that works. You can buy one with the intention of getting another type of dwelling will take some planning and time, but so does buying any property. You also can think of renting the condo to a tenant instead of selling it.

4. The Credit Dilemma

This is a good time to make sure your debts are under control, if not paid off. This includes student loans, car payments, etc. Three companies provide credit scores and the middle of the scores is usually the one loan officers tend to go by. Credit scores grade your ability to pay back loans (sort of like we would be if we loaned out money). This is why people talk about obtaining a good record of paying back debts rather than having no credit history. If you have no history, consider a secured loan that lets you develop a line of credit based on money you give a bank up front. If you have a poor credit history and you do not want that to count against you, focusing on adjusting that overtime may be your primary focus. This may include paying off some debts, but not necessarily getting rid of the credit cards themselves.

5. The Tenant Dilemma

Plenty of people would exchange renting in order to own their own homes. But, not everyone wants to have a tenant in order to do it. Not everyone is responsible enough to take care of a house, let alone a tenant’s needs. This is important since tenants come with costs and expectations that should be met, requiring your savings and/or the income they pay. This is where you consider the qualifications and contracts for tenants. You can use services to screen tenants and avoid having tenants who you would never want to ask to leave if necessary, including family. This protects you, your property and your children’s future investment property.

Looking Forward

Continue your financial education so that you will dare to take action.

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