Dave Ramsey Says These Are All Really Bad Reasons to Buy a Home

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  • Buying a home is a big commitment and expense.
  • You should only buy a home if you feel ready financially and emotionally, and if you're planning to stay put for a while.

You don't want to buy for the wrong reasons.

There are different benefits to owning a home rather than renting one. When you own your own place, you get to build equity in an asset that can gain value over time -- whereas when you rent, you're helping your landlord pay their mortgage so they can do the same.

Owning a home can also lead to stability. You don't have to worry about a landlord not wanting to renew your lease.

But while homeownership has its perks, if you're going to buy a home, you should do so for the right reasons. And according to financial guru Dave Ramsey, there are some really bad reasons to become a homeowner, like these.

1. There's a so-called great deal to be had

You may be driving around your neighborhood when you come across a home for sale. You might then look at the listing and see that the sale price is really a bargain. But does that mean you should rush to put in an offer? Not at all.

First of all, if a home is substantially underpriced, there may be a reason for it -- such as there being damage to the property or another major flaw. Secondly, even if the home in question is a genuinely good deal, if you're not financially ready to purchase that property, then it's best to walk away.

You may be eager to scoop up a three-bedroom house in your neighborhood for $300,000 when most homes have recently sold for closer to $350,000. But if you can't afford the mortgage on a $300,000 home, then it's not a bargain for you. If anything, it might get you into a world of financial trouble.

2. You're feeling pressured

It's common to spend a good number of years renting a home. As you get older, you may feel pressured socially or societally to purchase a home and stop renting. But that's not a good reason to buy.

First of all, there's nothing wrong with continuing to rent if that setup works for you. Secondly, everyone's financial circumstances are different. Maybe you took on extra debt because you went to grad school when your friends didn't, so they were able to purchase a home in their late 20s or early 30s while that's still a stretch for you.

Owning a home is a huge financial undertaking, so it's important to make that move when you feel ready. Don't let peer pressure drive you to take on an expense you might struggle with.

3. You're in an area temporarily and need a roof over your head

Maybe you just rolled into town for a two-year grad school program and need somewhere to live. You might think buying a home is a great idea so you can build equity in a property and avoid renting. But if you're convinced you'll move as soon as your studies are over, then buying isn't the best choice.

When you buy a home you finance with a mortgage, you pay closing costs on that loan, and those could be substantial. It can take several years to recoup those costs and come out ahead financially. If your housing situation is only temporary, renting tends to make the most sense.

There are plenty of good reasons to buy a home. But the three above fall into a very different category. And so Ramsey advises against buying if these circumstances apply to you.

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