Buying a home is one of the biggest financial decisions you ever have to make. You will be required to ask yourself questions about the kind of floor plan you like, the neighborhood or area of town where you would like to live, the price range you can afford, and your preferences regarding having a yard which will require regular work and maintenance vs. a maintenance free lawn provided through a condominium or patio home. However, the most important question (the question you should ask yourself first) is should I rent a home or should I buy?
There are definitely advantages and disadvantages to both and it is important to consider the pros and cons before making the leap into homeownership.
Advantages to Buying a Home Include:
Equity or Savings
If you are renting, the money you spend each month pays for your place to live, but it does not provide any kind of long-term benefit or savings to you. If you purchase a home and are paying your mortgage payment each month, you are building equity in your home. The more you pay, the more equity or savings you have. Homes typically increase in value, which also increases the equity or savings you have in your home.
Income Tax Deductions
You can deduct the amount of interest you pay through your mortgage payments as well as the amount you pay in annual property taxes. Uncle Sam does not allow this deduction for rent payments.
You can paint every room a different color and decide on any carpet or floor covering you want if you own your home. However, if you rent, your landlord most likely will have restrictions on painting and other creative ideas you have to make your home fit your personality.
Stable Housing Costs
With a fixed rate mortgage, your monthly housing costs will be more stable than rent which can increase from year to year.
Home ownership can also develop a sense of self-pride, which provides strong ties to the community in which you live.
Advantages to Renting Include:
Repairs to a home can be costly. As a renter, the landlord will be responsible for any repair costs.
Since leases tend to be short term (a year or less), it is easier to move around if you rent.
Insurance as a renter is much less expensive than insurance as a homeowner. You are only responsible for insuring your personal contents and not the home itself.
Purchasing a home or choosing to rent is a personal decision that you as an individual must make. Owning a home is a financial responsibility that requires planning and commitment. Home ownership is not for everyone. Renting can be easier if you want to pursue job opportunities that may require frequent relocation. However, home ownership makes sense if you plan to settle into an area or community and want to pay toward something you can eventually pay off and own outright.
Should you buy or should you rent? It can be a tough decision to make. We have qualified mortgage professionals that will be happy to assist you in this process. We have many programs, including down payment assistance, that can be tailored to meet your needs. Visit our website at www.syb.com for more information.