The Rewards and Realities
There are plenty of good reasons for buying a home, ranging from the purely personal to the very practical.
- A Place 0f 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.
- 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.
The Realities
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.
