Are you at a place in your life where you’re considering purchasing a home? If so, you’re most likely hearing advice from friends, family, coworkers, and maybe even strangers. Some are telling you it’s the perfect time to purchase a home loan, others are telling you to wait. So what do you do? Is it a good time to jump in to the world of home ownership?
Well, frankly, that’s a decision only you can make; because only you (and maybe those close to you who you’ve discussed this with) know your situation well enough to make an informed decision. But, what we can do is help educate you about the reasons to buy now, as well as the reasons you may want to wait a bit longer.
First, here are some great reasons why you should buy a home now:
You Get to Own a Home! There’s something special about owning your own home. It’s a tremendous accomplishment. Something only about half of Americans have the opportunity to do. And when you own your own home you can paint the walls any color you want, even pink; or listen to loud music or put up a funky looking light fixture without hearing about it from the landlord. There’s also a sense of stability for you and/or your family. It can be a real family bonding experience as you make the house a home together.
The Potential Tax Benefits.While the tax benefits alone are almost never reason enough on their own, it is a nice benefit to owning your own home. Between the deductions you’ll receive from the interest you pay, and the deduction for property taxes paid, you could see a nice reduction in the amount of income taxes you have to pay.
The Opportunity for Appreciation.While I tend to agree with those from the world of finance who tell home owners NOT to think of their house as an investment, that view doesn’t negate the fact that the possibility of appreciation exists. Even though the last few years have seen a rough down turn in house values, a longer term historical perspective reveals there have been some years with double digit appreciation. Again, is it the reason to purchase a home now? No, but the possibility doesn’t hurt; especially now that appreciation appears to be on the front end of a positive streak.
Building Equity.There’s no denying the fact that the percentage of your monthly mortgage payment that goes towards principal is small, at least in the early years. But, when you own your own home, you are reducing the principal each month and therefore building equity. In fact, whether you’re renting or own your home, you’re paying down the equity each month. The question is, are you paying down your equity or the land lord’s?
Now the flip side – reasons NOT to buy a home:
Renting is Cheaper. There are markets in which renting a home is significantly less than buying the same home. These are generally markets in which home prices are so high that few people can afford to buy. If you live in a city like this, and the objective is simply to have a nice place for your family to call home, renting may be your best option, if not your only option.
Real Estate Market in Decline.While real estate values in most of the country seem to be on the rise, there may still be markets that are still declining. If this describes the market you live in, you may want to put off buying a home until it has leveled off a bit.
Not Financially Ready. Whether it’s the need to save money for your down payment, paying down your consumer debt or you need time to get your credit repaired, you’ll want to make sure you’ve got your finances in order prior to pursuing a home purchase. While there are low down payment options for buying a home, that doesn’t mean you should take advantage of those if your entire financial situation needs work. And in today’s home mortgage lending environment, having a lower credit score can make a significant difference in the interest rate you’ll receive, which can cost you thousands of dollars over the life of your mortgage.
Staying Put Is Not Your Style. If you’re a person who likes moving a lot (they are out there); or your job forces you to move a lot, it’s pretty clear you’re a great candidate for renting. Buying, and especially selling, a house can be very expensive. Unless you know you’ll be in the house for a few years, it’s likely you’ll be better off financially if you rent instead of buy. If you purchase a home and you’re only in it for a couple of years, it would take quite a bit of appreciation to make up for the cost of buying and selling.
IS IT TIME FOR YOU TO BUY A HOUSE