Life is full of important financial decisions that can impact your involvement in real estate investment later on. For example, something like buying a new car requires a financial commitment that would greatly affect your budget for buying a new home. Ultimately, you should always weigh your options carefully and consider what will benefit you best. Many individuals assume they should buy a car first because it’s cheaper than buying a house. While transportation is undoubtedly important, it may force you to wait longer to invest in real estate. Unfortunately, the real estate market is constantly changing and you could have a difficult time selling or buying if you wait too long. Here are five substantial reasons why you should invest in buying a house rather than a car.
1. Real Estate Market Changes
One of the biggest things to consider when looking into real estate investment is what kind of market and economy. Choosing to buy a car over buying a house could mean missing out on great financial opportunities. For example, the real estate market sometimes becomes a “Buyer’s Market” which conditions favors those who are looking to buy property. This is an ideal time to buy a great home for an ideal price, but this period doesn’t last forever. Not to mention that interest rates may go up by the time you are ready to buy a home after your car purchase. To have a satisfying experience with real estate investment, you’ll need a great Phoenix AZ realtor with in-depth knowledge about market changes. Car prices are much less likely to fluctuate over time, so you won’t be missing out on home-buying deals.
2. Qualifying For A Mortgage Loan
Another reason that you shouldn’t buy a car first is that it may prevent you from qualifying for mortgage. Say for instance you miss a car payment, which would highly damage your credit score and hurt your chances of qualifying. In the real estate investment process, having good credit is incredibly important for receiving any financial assistance in buying a new home. Furthermore, applying for car loans does not require the extent of credit analysis a home purchase does. This way, you can safely purchase a home without risking your chances of getting a car loan, whereas vice versa is much more risky.
3. Assessing Your Budget & Time
For those who are currently working on saving up cash for a big purchase, remember that buying a house is a much slower process. Finding the perfect home, putting in an offer, and coming to an agreement with the seller is a process that gives you time to build your savings up. Many people would rather buy a car because it’s cheaper and requires less effort, but saving up for a house allows you more time to pay off bad credit, debt, or other expenses. This could include saving up more money for a future car! Budget your time and money to determine what is worth investing in first.
4. The Financial Changes A New Home Will Bring
More often than not, buying a house actually helps people solve other financial problems. Such as no longer paying for an older home or apartment that constantly needs repairs. Or you may find a home with more amenities that helps you save on trips out to eat or laundromat visits. You may even be looking to move closer to work or school, which would cut down your transportation costs. This is all money you can use to help pay off debt or save up to reinvest into a new car or other important updates.
5. Other Personal Reasons
In the end, it should really come down to which you think would benefit you best for the next 5 years of your life. You may have to choose between being uncomfortable in a car or house until you can afford to update both. You could also consider your family’s situation and whether they need more space at home now or if it could wait another couple years. In theory, it makes more sense to upgrade the place you spend the most time in. Financially speaking, your house will appreciate in value over time whereas the car will depreciate. Your final decision should reflect your needs instead of wants, so that you will get the most profit from whatever upgrade you choose.
Getting Professional Advice
Depending on the individual, deciding between buying a home versus buying a car is an extremely tough choice to make. You may have to compromise with renting instead of buying a home, or buying an older, used car to ensure you have enough money for both. You may want a professional opinion to help you make a plan of action for your future purchases. Fortunately, realtors at Century 21 Northwest Realty have great advice to offer regarding making financial choices that will benefit your real estate investment experience.