- We're often told that homeownership is the key to wealth.
- In reality, buying a house is an expensive prospect and not right for everyone at every stage of life.
- If you have a financial misstep, even a big one, it's possible to come back from it.
Hindsight can be 20/20.
I'm hoping to buy a house in the next few years, but my feelings on the subject of homeownership have changed recently. If you had asked me a few years ago if I was planning to buy again, my answer would have been, "NO WAY." What's up with that?
A little background
More than a decade ago, I bought a house in the city I moved to for my first job in my old career. I was tired of living in an apartment complex, tired of sharing walls with other tenants, and tired of having to compete for parking every day.
I was raised on the idea that buying a house was “the key to wealth," while renting was "throwing money away." So I got pre-approved for an FHA mortgage loan through my bank, and I was fortunate enough to have family help with the 3.5% down payment required. After a few hiccups (including a contract termination on a different house that turned out to have lots of problems; never waive that inspection contingency), I closed on my house and assumed ownership. This turned out to be a mistake. Here’s why.
I lived paycheck-to-paycheck
At the time that I unwisely became a homeowner, I was in my mid-twenties. I was making an okay salary for my city, and I was married to someone who made less than me, but still enough so that between the two of us, we did all right… as renters. However, we had a lot of debt. I had bought a new car the previous year, and was paying off my education (I had finished graduate school just two years prior). My spouse at the time also had a vehicle we were paying for. And we weren't frugal with our spending. After a few years of student poverty, I was definitely living up to my means. It's a much wiser move to live below your means, and save money. I was not doing this, and generally found myself nearly out of money right before every payday.
I was unprepared for what homeownership entails
Many people are excited to paint and remodel a house. I didn't have much interest in doing those things. I also didn't have money to meet the expenses of homeownership. And I was told during the home inspection that the roof was older and likely only had a few years left. Thankfully, that wasn't something I had to deal with during my two-year stay in the house -- because I was not at all ready to handle something like that. I wouldn't have been up on the roof replacing shingles, but I would have had to pay for it and coordinate the work. I was lucky that nothing major went wrong with the house when I lived there. I had to replace the refrigerator that came with it, but that was pretty easy.
I wasn't settled in my career… or my life
My old career was not one usually eligible for remote work, and in a field where a new job usually means relocating to a new city. I moved over 1,000 miles from the state where I went to graduate school to the city where I had found a job. I had only been in that city for a year and a half when I bought the house. I stayed in the job for nearly four years, but then I was laid off. To make matters worse, I ended up going through a divorce not long after. Now I had a house I couldn't afford, in an area I was going to have to leave for a new job.
What I wish I had done instead
It took me another three and a half years to get out from under the house, by letting my mortgage lender take it over and sell it (this is called a short sale). I had to coordinate that process from another state, 500 miles away, where I was living by then. And just a few months after that, I got a job offer to bring me to the state I live in now, and where I intend to stay for a good long while (and as a remote worker now, I am free to live where I choose).
Ultimately, I wish I had rented a house instead of buying one. I could still have gotten away from my apartment complex. It would have given me time to save money and get my finances in order, then decide whether owning was something I even wanted to do. And since my house debacle, I've lived in three other states, in multiple rental situations. Some were better than others, but all gave me the freedom to move when I needed to, and breaking a lease is far less expensive and stressful than selling a house.
Life is unpredictable, and being tied to a massive financial commitment isn't right for everyone at all stages of life. I'm older and wiser on money matters now, and if I buy again, I won't remake these mistakes.
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