Considerations when buying a home start before you talk to a loan officer or real estate agent. Are you really ready for homeownership? There are many considerations to be made when comparing renting vs. buying. You want to have considered the following before you sit down with a loan officer to get pre-qualified or get in touch with a real estate agent to get started on your home search.
Am I Ready To Be A Homeowner?
Owning a home brings along much more responsibility than living in an apartment or a rented house. In a rental all you have to do when there is a problem with the sink, or toilet, or hot water heater is to call the landlord. As a homeowner you do not have the option of calling anyone to take care of fixing your problem. Worse yet, you are the one who has to pay for the repairs. Perhaps this is an opportunity to call your in-laws, or your parents for their advice on what to do about a problem but again the buck stops with you.
Countered with being your own landlord is the freedom and flexibility that comes with homeowner ship. In most cases, you won’t have anyone tell you that you can’t have a pet, or paint your home. You get to say what you do with your home. Homeownership also provides the homeowner with a place to lay down roots, perhaps yard space for kids to play in, easier access in many cases to parks and greenbelts and apartment living, the pride that comes from owning a home, and perhaps access to better schools for kids.
Rent Versus Buy - Wealth Accumulation As A Homeowner Versus Renting
Many arguments fly in the face of renting in favor of homeownership for the mere fact that paying into a mortgage and equity helps build the personal wealth of the homeowner. Whereas, renting pays into the wealth accumulation of the landlord. Something that often gets over looked in this case is that renters, if they are smart with their money can also accumulate wealth.
If we compare apples for apples in that the renter and the homeowner have the same living requirements then it is most likely that the renter will have lower living expenses throughout the year as compared to the homeowner. What if the renter in this case took the savings in their monthly budget and invested it into some sort of investment? The renter could also accumulate wealth.
For the homeowner, the only real way for the homeowner in this case to accumulate wealth with their housing payments is by a slow pay down of their loan balance and appreciation in the home’s value to build equity. Equity doesn’t earn interest like investments can.
Extra Monthly Expenses As A Homeowner Versus Renting
As a homeowner not only do you have the mortgage to pay, you have real estate taxes, sewage, water, utilities, repairs, home improvements, yard maintenance and equipment and other maintenance costs. As a renter, you have your rent payment and perhaps utilities.
There are certain tax advantages to owning a home like mortgage interest as a tax deduction that a renter does not get. This sole reason is not enough to argue that homeownership is for everyone. Again it does take careful and close analysis to see if the overall expenses tied to owning a home are counter balanced sufficiently against that of tax benefits to make a case for you becoming a homeowner.
Homeownership Is A Matter Of Lifestyle
When you rent, you can pretty much pick up and move when you need to. Sure, you’ll have to deal with the lease, but if push comes to shove getting out of a lease is much less hassle than getting out of homeownership and a mortgage in many cases.
As a renter, you could be relocated to another city fairly easily whereas a homeowner you have a lot more to consider when it comes to moving. As a homeowner you could be in real trouble if your home doesn’t sell and you get stuck with two housing payments or worse yet, you have to let the home go in a foreclosure. I’d rather take a collection or judgment from a lease gone bad than a foreclosure on my credit any day.
As I started out this article, there are many considerations about owning a home. From the start, pre-qualifying getting pre-prequalified is about sorting through the reasons for buying a home versus renting.
Don’t get me wrong, homeownership is great and I own my home, but my wife and I didn’t decide to just buy a home one day. We took a long look at our future, circumstances, hopes, dreams, desires, wants, and needs to help us in moving forward with becoming homeowners. Hopefully you’ll do the thinking that you need to do to make sure you come up with what’s best for you and your family – should you rent or buy.
Additional Items to consider when buying a home.
