Many folks as the question, “Should I rent or should I own?”. The answer is maybe. It depends on your particular situation to see what is right for you. When pondering the decision, consider the following factors:
•It’s not just about paying the mortgage. There are other financial factors that you need to take into consideration when it comes to your monthly payments. While it’s true that with every mortgage payment you make, you build equity, there are other expenses to consider besides your mortgage payment. For example, you will have to pay property taxes on your home and will also face additional monthly and periodic expenses, such as homeowner’s insurance, repair and maintenance costs. If you’re considering buying a condo, the homeowner’s association fees should be factored.
•Don’t forget the cost of buying a home. In most cases, you’ll need a down payment (usually between 5 percent and 20 percent of the purchase price) and have to pay closing costssuch as attorneys’ fees, loan origination fees (often referred to as “points”) and recording fees. Be sure to find out approximately how much you’ll need in total closing costs before you buy any property. Your realtor can provide you with all the estimated closing costs, and your lender is required to provide a ‘good faith’ estimate within three days of submitting the loan application.
•There are tax advantages to owning a home. For example, the mortgage interest you pay is, in many cases, tax deductible. So, too, are your property taxes in most instances.
•A home can be a good investment. In addition to simply putting a roof over your head, your home can also be an excellent investment. That’s because home prices often rise from one year to the next. (When you sell your home, you can cash in on this appreciation. Buying and selling your primary residences can incur stiff taxes and penalties, so check with a tax advisor prior to looking to sell your home.) As with any investment, however, “past performance is no guarantee of future returns.” Simply stated, home prices don’t necessarily rise every year. Some years, they actually fall instead of rise. For that reason, it’s possible to lose money if you “buy high” and “sell low”.
How long do you plan to live in your home? If you know you have a job transfer that will take you to a different geographic region within the next year or so—or you aren’t sure you want to stay in the area in which you currently live—it may not make sense to purchase a home. Why? Because you pay closing costs when you both buy and sell a property. And your out-of-pocket costs in both transactions could be high, especially if your home doesn’t appreciate much in value while you own it. In such instances, you could actually have to come up additional cash to pay the bank when you sell your home.
Benefits of home ownership are good, but it’s up to you to determine whether is is right.
For more information, visit my buyer’s center at http://www.JosephCapote.com
Filed under: Buyer's Blog, first time homebuyer, first time homebuyers
Joe Capote 