Here’s When Suze Orman Says You Should Not Buy a House

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When it’s right, it’s right. 

If you’re anything like me, you’ve always heard that homeownership is part of the American Dream. It’s how families build generational wealth. Owning a home plants you firmly in a community. And for some, homeownership is a status symbol.

The pressure to pull money from your savings account and buy a home can be intense. Unfortunately, according to an Anytime Estimate American Home Buyer Survey conducted in July 2022, nearly 3 out of 4 (72%) respondents who purchased a home in 2021 or 2022 have regrets about the purchase.

So, how do you know when it’s the right time to buy? Here, Suze Orman helps answer that question by pointing out when it’s the wrong time to buy a house.

When credit card debt and down payment are out of whack

According to Orman, if you’re carrying credit card debt and have yet to save up enough money to cover a 10% to 20% down payment, you’re not ready to buy a home.

Orman is right. As someone whose greatest financial regret is buying a home before we were ready, I know that it can take years to get caught up. If you’re still lugging around high-interest credit card debt and don’t have much of a down payment saved, you have two things to accomplish before contacting a real estate agent:

Focus on paying off your credit cards. Once that high-interest debt is gone, you can deposit the money you save each month directly into a house fund.Aim for a down payment of 20%. Yes, you can finance a home with a smaller down payment, but you’ll end up paying private mortgage insurance (PMI). PMI typically costs 0.1% to 2% of your loan amount per year.

If you don’t plan on hanging around

Orman says that if you can see yourself moving within five to seven years, you may want to hold off on buying. Again, this is solid advice. Due to job transfers, my husband and I have purchased 10 homes over the years and sold nine.

The homes we lived in the longest were the only ones to net us a profit. Sometimes we nearly broke even, and on one occasion, we had to bring money to the closing table because, after expenses, we didn’t clear enough to pay off the mortgage.

As a home buyer, you pay closing costs. However, as a seller, you’re responsible for real estate fees of 6% (3% to the buyer’s agent and 3% to the seller’s agent). You must also cover closing costs and moving expenses. By the time you add up your expenses, they can eat up to 10% of the sales price of your home.

If you don’t plan to stay around long enough for the home to appreciate, hold on until you land somewhere you want to stay.

When the numbers don’t make sense

Let’s say you’re renting a great house or condo and are fortunate enough to be doing well financially. You have some money left over each month and are able to invest in things like your children’s education and retirement.

There’s nothing saying that you have to change anything. Use a housing costs calculator to crunch the numbers. Owning a home can be expensive, and it’s possible that renting simply makes more sense right now.

If the responsibility does not appeal to you

The average American homeowner spends more than $3,000 per year maintaining their home. But it’s more than money that matters. As a homeowner, there’s a constant stream of issues that need addressing. If it’s not a leaky hot water heater, it’s a missing roof shingle. If the idea of spending weekends fixing problems around the house does not appeal to you, it’s okay to wait.

If I could add one thing to Orman’s list, it would be this: It’s not the right time to buy a home if there’s something you would rather do with the money. Let’s say you long to go back to school to become a geologist or dentist. Or perhaps you want to travel extensively, teach abroad, or live a more nomadic life. Do not go to the trouble and expense of buying a home if it means putting the kibosh on your dreams.

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