Are You Ready To Be A Homeowner?
There are plenty of good reasons for buying a home, ranging from the purely personal to the very practical.
A Place of Your Own: “Your home is your castle”, as the old saying goes. Perhaps you are ready to settle down in your community, and want the feeling of permanence and involvement that comes with owning your own home.
Financial Incentives: For many people, the motivation for homeownership is primarily financial. Owning your own home can be a first-rate investment for the following reasons:
- When you buy a house, your monthly mortgage payments serve as a type of scheduled savings plan. Over time you gradually accumulate what lenders call equity.
- If your home appreciates, the added value (known as home equity) is as good as money in the bank to the homeowner.
- Homeowners receive federal and, in some cases, state income tax benefits not available to renters.
Like most good things in life, you have to take the good with the bad. Actually, the realities of homeownership aren’t really that bad. But there are a few things you should consider before you make the decision to buy a home.
- Financial Commitment: When you purchase a home, you’ll have to make a serious financial commitment right from the get-go. For starters, there are some major costs involved in purchasing a home. These include the down payment and closing costs. Typically, the required out-of-pocket costs for purchasing a home are substantially more than the first and last months rent that are the standard in renting a house or apartment. Naturally, this requires a large sum of your money and advance planning.
- Long Term Expenses: As a general rule, during the first several years of ownership it is more expensive to own than to rent. The expenses of mortgage payments, insurance, taxes, and maintenance can add up!
- Decreased Flexibility: Owning a home ties you down. It may limit your flexibility in accepting a new job or work location. Homeownership also ties up your money. You can’t spend everything on an exotic vacation when you’ve got a mortgage payment due.
- Less Free Time: Home maintenance projects can take up a lot of your time. Even if you have contractors do the work, plan on spending many hours selecting and monitoring them.