Money Adviser with Hopeton Morrison
Purchasing a home is widely regarded as the biggest financial decision persons make in their lives. Generally we look at the reasons for, and the advantages of, buying real estate. There are times when it is even more important not to buy. Here are five reasons to delay or put off your purchase of a home in Jamaica:
If you are planning to sell your home soon after purchasing, you should not buy. You are selling before it has appreciated enough to compensate for your massive payments of taxes and fees. If you are using a real estate agent, factor that cost in also. Unless you are awash in cash, real estate is not ideal for short-term speculation.
If you are unsure about the future potential of the location, do not buy. There are dream homes everywhere. You may come across the home of your dream, but if it is in a community that is showing signs of decline it is unwise to buy. One basic rule of thumb is that it is financially prudent to buy a 'lesser' home in a high-potential location than to buy your dream home in a declining one. As much as the home decision is heavily weighted towards sentiment, at the end of the day it is first and foremost the largest financial decision you are likely to make in your life at that point in time and, therefore, primarily a financial decision.
You are uncertain of your personal job future. That is hardly news for many in Jamaica where at the best of times stable and secure jobs are very hard to land. But you can only play the cards in your hand at a particular point in time. If you consider yourself fairly securely employed, then you are justified in purchasing. If you lose your job in the process, that is just the way life goes. In that regard, be reasonable in your purchase. It is best to buy a functional home that has potential for improvement while being easy on your pocket and your mind than to buy one that eats up all of your income while leaving you with no room to manoeuvre in the event of a job loss. There may be many voices advising you about the virtues of a particular home or location, but the only voice that you should listen to is that of your budget.
Buying a home to resolve relationship problems. It rarely works out when couples engage in this activity. Some couples who are having marital problems believe that doing something big together such as purchasing a new home, or having a baby will bring satisfactions that will outweigh their problems. It usually does not. This type of vicarious problem solving only compounds the problem and makes for more pain if the couples separate.
Making your decision to purchase based on a single visit. It is always unwise to engage in the largest financial decision you will probably make based on a first impression. Visit the home you plan to purchase at least twice before committing. Visit in the day, night and on weekends. See what your new neighbourhood is like at varying times of the day and week.
Hopeton Morrison is general manager of St. Thomas Cooperative Credit Union Ltd. and lecturer in the School of Business Administration at the University of Technology. Please send comments and questions to hmorrison@stccu.com.
