Should You Rent or Buy?
Understanding the Advantages of Being a Homeowner
It’s true – there are some major advantages that come from being a homeowner. For example, instead of just paying a landlord every month, you’re actually investing in an asset that has the potential to grow in value over time. In addition, the government has a whole package of benefits for homeowners, even beyond the $8,000 tax credit they’re currently offering to new homeowners. When tax season rolls around, you’ll also be able to deduct the interest on your mortgage, your property taxes and many other financial elements against your annual income.
However, homeownership isn’t for everyone. There are plenty of reasons why you might not be ready to make the leap from renter to owner. Let’s look at a few:
How Big is Your Bank Account?
Buying a home isn’t just trading in your monthly rent for a mortgage check – there’s a lot more that goes into the price of buying a home. Before you even set foot in your new home, you’ll have to pay for home inspections, appraisals and the closing costs that are part of the home buying process. And, unfortunately, the fun doesn’t stop once the deal is finished.
Another thing to consider is whether or not you’ll be able to afford any major repairs your home needs once you’ve settled in. As a renter, your landlord takes care of things like leaky faucets, malfunctioning appliances and more serious repairs, including roof, siding and foundation problems. As a home owner, the ball’s in your court to take care of these problems and they can get expensive. When you’re considering homeownership, take the time to determine whether or not you’d be able to cope with an extra $1,000 of repairs you weren’t expecting at any given time.
How Stable is Your Lifestyle?
Are you ready to settle down in one area? Or is it possible that your job will require relocation to another area? The stability of your lifestyle is another important consideration to make before you start shopping for a home.
Most experts recommend not buying until you’re ready to spend three years in the home, as it will take that long to turn a profit on the sale after expenses like realtor commissions are taken into account. In fact, some economic analysts are extending this recommendation to five years, given the recent financial losses in the housing sector as a whole. But regardless of which prediction is correct, the end result is the same – don’t buy a home until you’re ready and willing to commit to one place for several years.
So What Should You Do?
The decision to become a homeowner isn’t one to be made lightly. However, there’s no doubt that now is a great time to buy a home – prices are lower than ever, inventory is at an all-time high and the government is offering plenty of incentives for both first-time and repeat home buyers to make a move. If it’s something you’re considering at all, make an appointment with your real estate agent and a mortgage lender to learn more about the home buying process.