I’m not quite sure who coined the term “The American Dream,” but something tells me the banks were behind it. That old, red, white, and blue dream often involves a house with a white picket fence and you know what houses are? Expensive. We’re pitched the idea that we’ve “made it” once we own our homes but…a lot of actual homeowners would tell you that they feel differently. Don’t get me wrong: under certain circumstances and for certain individuals, buying a property is a great thing. Imagine owning your home and not having to pay rent every month? There is tremendous financial stability that can comes with removing that major expense. But, that’s not exactly how it shakes out for most people. For many, “The American Dream” feels more like a waking nightmare that they really wish they could get out of. Here is why that is.
It may be a long time until you own it
Try to remember that if you take out a loan to buy your home (which most people do), then you don’t own your home: the bank does. Depending on the terms of your mortgage, you may not actually own your home for decades. You are still paying “rent,” it’s just in the form of mortgage payments. You do still need to write a check every month to make sure that roof stays over your head.
Unless you want to go broke right now
The only way to get around waiting forever to own your home is to get a short-term mortgage. The interest rates will be lower, but you’ll essentially need to pay a massive amount of money in a short amount of time. Some people can technically afford to do so, but it just means putting all of their savings into the house and going broke to be homeowners.
One way or another, buying a home can often rule a person’s life. Before, when you were a renter, perhaps you enjoyed going to restaurants every weekend and going on vacation a few times a year. But homeownership, for many, means living on a very tight budget since every penny has to go towards that mortgage. You have a house, sure, but you may not have a life.
It’s common for many today to take up second jobs just to pay their mortgages. In that respect, you really don’t have a life—all because of the house. The house controls your every waking minute. You live and breathe, just to pay off the house. You may have a house, but you’re barely home to enjoy it because you’re working an office job during the day and driving for Lyft at night.
Some take on roommates
I know a few homeowners who had to rent out rooms in their homes in order to make their mortgages. The entire reason they bought homes in the first place was to finally better control their living situation and not share walls with neighbors in apartments. Now, they have tenants in their house.
Spending money on money is awful
If you think about it, spending money on money is kind of gross. And the amount of money you spend on money for a house is really terrible. Let’s say your mortgage rate is 4.5 percent (which is honestly low) on a $200,000 house. You’ll ultimately pay the bank back just shy of $365,000 for that money. That’s $165,000 in interest.
A missed payment can=losing your home
Being a little late on your rent is always stressful. But sometimes you can work things out with your landlord. The worst thing that happens is you’re on the hunt for a new apartment. Missing mortgage payments can mean losing your house.
Repairs can financially destroy you
It’s nearly impossible to accurately budget for repairs. There is no knowing what that house could have in store for you. If something breaks, it could wipe out your savings.
The terrors of a lien on your house
If you owe money to a creditor, they could put a lien on your house. Now that home that you worked so hard for is hanging in the balance, and could potentially be taken away from you.
Don’t forget about HOA fees + insurance
We often overlook these, but they should be tacked onto your monthly budget for the house. HOA fees can be multiple hundreds of dollars every month. Insurance can also rack up a few more hundred.
What lies ahead in your neighborhood?
You think you want to live in that neighborhood forever, but you don’t actually know what the neighborhood has in store. Think of all of the elderly individuals you know (or even just middle-aged people) who complains that their neighborhood “isn’t what it used to be.” Perhaps the city built a metro station right in the middle of it or built a prison there. Now you’re stuck there. You own a house there. If you live in a condo, changes to the whole building can affect the value of your unit. That’s just one thing to consider when choose a condo versus a house.
That affects the value
Those surprise neighborhood changes affect the value of your property—drastically. You once bought this house thinking any buyer would feel lucky to have it in forty years. Now, with the changes to the neighborhood, you know you’d have to slash the selling price just to get one bite.
Even if it appreciates, it’ll be a while
If your home does appreciate, it will be a while. A lot of people buy homes because they’re “an investment.” And, a home is that, but it’s an investment that you may not be able to cash in on for several decades. If it’s an investment you want, there are a lot of other ways to grow money that are much faster.
What if you don’t live to see it?
What if you don’t live to see your house appreciate? What if you pass away before you can sell the house for profit? If that profit wouldn’t kick in for thirty years or so, well, it’s possible.
What if you don’t live to own it?
If you have a 30-year mortgage, you may not live to own your home. You went into this to be a homeowner, but what if you pass away before that mortgage is paid off?