There are few things as rewarding as buying your first home. The sense of pride you feel can be enormous. When you make the decision to go from renting to owning, you are taking a step in the right direction. Home ownership can offer tax benefits, freedom to make decisions about your home, and investment benefits.
Still renting?
There are some benefits to renting; such as, short-term obligation, no commitment to maintenance, and no responsibility to other financial costs associated with ownership. But renting should be viewed as a temporary lifestyle. There are no long-term financial gains to renting. In some cases, monthly mortgage payments can be as low as renting. And by owning, you have an investment you can use as collateral.
Homes appreciate in value, especially in steadily growing communities. And, you can actually reduce your house payment when interest rates fall, by refinancing. You can't say that about renting! In fact you can count on your rent increasing annually and in some cases semi-annually.
Owning a home
Home ownership is a highly leveraged investment that can yield substantial profit on a nominal front-end investment. However, there can be costs incurred in ownership versus renting. Such as the down payment, maintenance costs and yearly tax payments. But again, these costs are being applied to an investment. At the end of the day, if you rent, you pay until your lease ends with nothing to sell. In ownership, the money you spend goes towards your profits from appreciation in the value of your home.
Did you ever wonder how some people afford such expensive homes? Chances are that may be their second, third, or even fourth home! Don't be discouraged if you can't afford the house you want the first time you buy. Make sure the area is right and you buy a house that fits your needs and budget. Buying at or below your price range allows you to use the extra money to do home improvements. Then in a few years time you can put the house up for sale, sometimes at a ten to thirty percent profit. You can then take that profit and put it towards your next home - bigger, newer and so on.
As for evaluating the risk in buying a home, do your homework. Take some time to investigate the communities you are interested in, at least a few months in advance to buying. Make sure you look at the growth of residential and commercial building. Look into the school systems to make sure they are right for your children. By spending time in your desired communities before hand, you can make an informed decision regarding whether or not the community is right for you and your family. Don't make the mistake of buying in an area where the housing and property are more expensive in hopes of increasing your profit. More money spent on a property up front does not guarantee you an increase in property value over less expensive communities. Don't be in a hurry to just buy a house. Buy the right house; remember you may be there a very long time. By utilizing your real estate agent's expertise and experience, you can find the house that is perfect for you.
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