As a first time home buyer with some money to put down on a home, I'm still having a tough time being able to qualify for the home that I really want. Should I wait until I can afford it and then buy? What should I do rent or buy?
Buying A Home - More Responsibility
Homeownership is great if you are ready for it. With homeownership, comes a great deal more responsibility for your home's upkeep. As a renter you can just call the landlord, or management office when there is a problem and they take care of it. As a homeowner, you will be replacing appliances and hot water heaters for example.
Buy Low Now To Build Equity - Sell - Then Buy What You Want
One of the problems with waiting to become a homeowner is that you might wait yourself out of being able to get into a house of your own. Typically home prices go up over time and if you wait your income might not ever catch up to what it needs to be to afford to buy the home of your dreams. However if you purchase a home now that matches what you can afford you can put yourself in position to be able to make money on your home as home values go up. Over time, you may be able to make enough on your home if you sold it to provide enough money for a large enough down payment to buy the home that you really want.
Homeowners Build Wealth With Their Home Equity
With being a homeowner, comes the opportunity to grow your personal wealth or networth as your equity grows. As a renter you do not have this option as your rent payment is going to your landlord's equity not your own. It is important to not get too caught up in short lived drops in home values as over time home values have increased. So as home values increase you have the opportunity to grow your equity. Equity only becomes valuable to you when you sell your home. Over time if you are smart with how you refinance you can build up a lot of equity that would come in handy and be valuable when it comes time to sell your home.
Mortgage Interest Is A Tax Benefit In Many Cases
Another advantage to owning a home is the tax benefit you get from the IRS for the mortgage insurance you pay. In many cases, you get to write off your annual mortgage interest. As a renter you do not get to write off your rent payment - your landlord gets to write off their mortgage interest.
Conclusion - As a first time home buyer, you may have your dream home in mind when you begin your home buying search. However, you may find that you do not qualify for your dream home but rather a starter home. If this is the case, it might be a good idea to buy a starter home to begin your equity building. In time, it may be possible to cash in your equity so that you can use it to make a down payment on the bigger dream home that you want.
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