There are a lot of good reasons why a first time home buyer would want to buy a home now – even when the news is so scary and the economy is in a funk – and I have detailed them before in past posts. We all know the reasons to buy – home values are at fire sale prices, low down payment financing is available, interest rates are low and the government is subsidizing your purchase with an $8,000 first time home buyer credit. These are just a few of the reasons it makes sense to buy now. But buying a home isn’t for everyone, and there are some excellent reasons why you shouldn’t buy a home now. If any of these reasons hit your situation, you might be better served by waiting on the sidelines and continuing to rent for now.

Here are the top 10 reasons NOT to buy a home now:

10. You are worried about losing your job – Unemployment is up, and more and more people are nervous about the safety of their own jobs. If you’ve heard the rumblings in your company about lay offs and down sizing, and you think that your position might be one of the next to go, this probably isn’t the time to buy a new home. Buying a home is a long term commitment and you need to plan for the long run. But if you are uncertain of your own financial future, wait until you have more stability before taking the leap.

9. Your budget is strapped already – I talk regularly with people who are up to their eyeballs with credit card payments and other debt, who decide it is time to buy their first home. The best thing you can do before making the decision to buy a home, is to get your financial house in order. This means pay down those credit cards and work out a budget so you know you will be able to afford the new home without putting yourself in a worse situation.

8. You may be moving soon – Buying a home is a long term commitment (I think I said that before). Transaction costs for real estate are high. It costs a fair amount of money to buy, and a good deal of money to sell. Home buying can be a great investment if you are there long enough to reap the rewards, and your chances of doing well with real estate increase if you plan to be there for a longer time.

7. You are not ready to settle down – This is related to the previous reason, but a different concept. Will buying a house fit in with your lifestyle? Sometimes mobility has advantages. Owning a house can anchor you in to an area, and this is a good thing if you are ready for the stability this brings. But if you are still at a point in life where you want the freedom to be able to move and go in a completely different direction, owning a house can be a problem you don’t need.

6. You are not ready for the responsibilities of being a home owner – Can you handle minor repairs and maintenance yourself, or will you miss calling your landlord when something does go wrong? When the toilet gets clogged in your own home, it is your responsibility to fix it. Expect to spend some time mowing the lawn and shoveling snow (unless you are in a condo or townhome) and changing furnace filters. If you aren’t ready for these responsibilities, it might make sense to rethink whether this is the time for you to buy.

5. Lack of reserves – Things go wrong with houses, usually at the most inappropriate times. Do you have money saved up to handle unexpected surprises? You can buy a home with little or no savings left over, but it makes sense to plan for the unexpected and have some reserves built up too.

4. Home prices could go lower – Conventional wisdom used to be that you can’t go wrong buying real estate. The market over the last few years has shown us that isn’t always true. I think it is safe to say that we are much closer to the bottom of the real estate market than we are to the top. Especially since many first time home buyers are buying short sales or foreclosed properties where the prices have been slashed by the banks who are anxious to get out of a bad investment. But prices could still go lower. It is almost impossible to call the bottom on any market, and if you are planning on being in the home for a while, close to the bottom should work out well. But if you are concerned about buying early you might be better off waiting.

3. Renting may be cheaper – In the long run, owning a home has a lot of financial advantages – tax benefits, equity build up as you pay down your mortgage and hopefully price appreciation among them. But from a pure cash flow perspective, depending on your overall profile, it may be cheaper to rent. You need to consider your tax situation, how long you intend to stay in the home and your overall goals.

2. Renting fits your life style – Owning a home calls for commitment. If the timing isn’t right for you, or if you value the less tied down life style renting affords you, owning a home may be more of a burden than you want to take on.

And the number one reason why you should NOT buy a home now …

1. Owning a home is not the right decision for everyone. Make the decision that is right for you.

Every one of these reasons has a flip side of why it does make sense to buy. The thing is, buying a home isn’t the right decision for everyone, and you need to look at your own situation, life style and goals for the future and decide what works for you. That may mean buying a new home, or it may be best to continue to rent.

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