The first thing you have to consider is, do you really want to own your own home? Think about what is it you find appealing about owning your own home. When comes to buying a home there should be some serious thought involved because owning a home is a serious investment that takes time, energy, and money. So the next step is to take a look at what to expect from homeownership and what it takes to own your own home implies. First up: The Good Reasons.
Advantages of Homeownership
Most people have a good reason in mind when they decided to buy a home. It can range from the very personal to very practical, but most people want a place to call their own.
The saying goes, a persons home is their castle. Why do you want to buy a home? Have you decided you need to settle down and you want a feeling of permanency that you get from owning your own home? Maybe you are getting ready to raise a family and need more space. Or could it be you want to be able modify your living space like paint or remodel to meet your individual taste and needs?
The motivation for homownership can also be a financial one. Owning your own home can offer financial benefits as it is a sound investment and can be a way to reduce your tax obligations.
In a way your monthly mortgage payments can act like a savings account. Normally, you accumulate what is known in lender vernacular as "equity", which with ownership interest in the property you are often able to borrower against or gain a cash profit when you sell the house. As a renter you must continue to pay rent to a landlord for as long as you continue to rent and you are building equity for the landlord instead of yourself.
Stable Housing Costs: The biggest advantage of owning rather than renting is, rent typically goes up every year, while the principal and interest of a "fixed rate"mortgage remain unchanged for the entire repayment term of the loan, which would be 30 years for a 30 year fixed rate mortgage or 15 years for a 15 year fixed rate mortgage and so on. So this means you would pay the same amount over the years with ever cheaper dollars because of inflation. Remember though, with an adjustable rate mortgage payments may increase when interest rates increase. Your taxes and insurance may fluctuate, as well and your monthly mortgage payment will adjust accordingly. You can choose to pay those items on your own, but typically they are held in an escrow account for the lender to pay on your behalf every month.
Increased value: Usually, houses increase in value over time. In most parts of the country, you can find homes that sold for $100,000 15 years ago that are worth more today. The increased value or "equity", which discussed early, can be as good as cash for the homeowner.
Tax Benefits: As a homeowner you will get significant tax breaks that renters don't get. Interest paid on a home mortgage is most often tax deductible. Just the interest deduction on its own can save you a substantial amount of money on federal and state income taxes on a yearly basis.
So does owning your own home sound pretty good? Stay tuned...Next up we'll be looking at the disadvantages 0f owning a home.
Advantages of Homeownership
Most people have a good reason in mind when they decided to buy a home. It can range from the very personal to very practical, but most people want a place to call their own.
The saying goes, a persons home is their castle. Why do you want to buy a home? Have you decided you need to settle down and you want a feeling of permanency that you get from owning your own home? Maybe you are getting ready to raise a family and need more space. Or could it be you want to be able modify your living space like paint or remodel to meet your individual taste and needs?
The motivation for homownership can also be a financial one. Owning your own home can offer financial benefits as it is a sound investment and can be a way to reduce your tax obligations.
In a way your monthly mortgage payments can act like a savings account. Normally, you accumulate what is known in lender vernacular as "equity", which with ownership interest in the property you are often able to borrower against or gain a cash profit when you sell the house. As a renter you must continue to pay rent to a landlord for as long as you continue to rent and you are building equity for the landlord instead of yourself.
Stable Housing Costs: The biggest advantage of owning rather than renting is, rent typically goes up every year, while the principal and interest of a "fixed rate"mortgage remain unchanged for the entire repayment term of the loan, which would be 30 years for a 30 year fixed rate mortgage or 15 years for a 15 year fixed rate mortgage and so on. So this means you would pay the same amount over the years with ever cheaper dollars because of inflation. Remember though, with an adjustable rate mortgage payments may increase when interest rates increase. Your taxes and insurance may fluctuate, as well and your monthly mortgage payment will adjust accordingly. You can choose to pay those items on your own, but typically they are held in an escrow account for the lender to pay on your behalf every month.
Increased value: Usually, houses increase in value over time. In most parts of the country, you can find homes that sold for $100,000 15 years ago that are worth more today. The increased value or "equity", which discussed early, can be as good as cash for the homeowner.
Tax Benefits: As a homeowner you will get significant tax breaks that renters don't get. Interest paid on a home mortgage is most often tax deductible. Just the interest deduction on its own can save you a substantial amount of money on federal and state income taxes on a yearly basis.
So does owning your own home sound pretty good? Stay tuned...Next up we'll be looking at the disadvantages 0f owning a home.
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