It’s that time. Your new lease has arrived and the same question arises, Should I rent or should I buy?
Purchasing a home is a complex decision that requires education. Knowledge is Power! For some, it’s easier to sign a lease for another year and think about buying when the lease expires. Unfortunately, the majority of renters re-sign again and again.
We know the simple facts of owning a home outweigh renting. Some of the financial advantages are, the tax deduction for mortgage interest (yes that does still exist), and knowing a portion of your monthly mortgage payments are applied towards your principal balance is a plus too. Paying down your mortgage balance (by making monthly mortgage payments) frees up equity in your home. Equity is the difference between the mortgage balance that you owe and the value your home is currently worth. Not only does equity growth occur by making monthly principal payments to your mortgage but it also builds by the real estate market rising every year. While gaining equity is not a direct cash savings in your bank account, we must recognize it as an overall savings benefit of owning a home.
We talked about some of the financial aspects of owning a home now let’s cover some of the fun facts. Owning a home offers privacy, a piece of the American dream of homeownership, and a place to call your own. Purchasing a house can offer access to an outdoor yard for family functions and for your own enjoyment such as BBQ’s and holiday parties. It often provides parking spaces or even a garage and some have a pool or one can be added.
For those who are purchasing a co-op or condo, these can offer washers and dryer’s in the apartment or building, parking garages or assigned spots for cars, and some even have amenities such as a pool or gym and a community room to host family events. Imagine all of this while taking advantage of tax benefits and building home equity for your future.
As I mentioned in the beginning of this article, owning a home can be a complex decision. There is a fear factor of having a 30 year payment and simple fear of the unknown. That’s understandable and why it is so important to discuss your individual concerns and options with a licensed mortgage professional and tax accountant.
The truth of the matter is, that some renters can own their own home for less or equal to what they’re paying in rent. Don’t be mislead by the myth of needing a large down payment or excellent credit when applying for mortgage financing. There are programs out there that allow for non-perfect credit and less than 20% down payment. Everyone deserves the opportunity to get a better understanding about the home buying process, programs available and the qualifications.
Don’t let your fear of the unknown hold you back from becoming a homeowner and living out the American dream of homeownership.