One of the biggest decisions you will probably make in your lifetime is buying your home because of the time, money, and complexity of the process involved. Therefore, this decision should be approached carefully and seriously. It should be noted that owning a home is not for everyone and responsibilities will multiply. However, there are many advantages and rewards of homeownership.
You probably have heard all the old adages concerning homeownership, such as "Home Sweet Home" or " Your home is your castle." This can be true. Settling down in a community or becoming part of a neighborhood can and often does produce secure feelings of permanence. You may want more freedom than you had as a renter such as landscaping your own yard or remodeling your rooms, and this can be achieved in your own home. Of course, there are other advantages besides aesthetic ones.
There are a number of financial advantages to owning your own home as well. Your mortgage payment serves as a type of savings schedule. Eventually, your home will begin to accumulate equity, which is an ownership interest that can be borrowed against or liquidated to cash if the house is sold. With a fixed mortgage the interest rate of your mortgage usually remains the same throughout the entire duration of your loan. This is a plus when inflation and interest rates climb. We would like to offer a word of caution though. Please monitor your escrow account with your mortgage company. Your escrow account is where your mortgage company removes a portion of your house payment and stores it to pay for items such as all your tax requirements. If your principal and interest portion of your mortgage payment change, it is usually because not enough money is being placed into your escrow account. Speaking of taxation, homeowners qualify for tax benefits that do not apply to renters. The primary benefit is that the interest paid on your mortgage is often tax deductible and can save you money annually in federal income taxes. Finally, homes, if they are well maintained, increase in value. It is not uncommon for homes to have higher selling prices than purchase prices, which would mean increased profits for the homeowner. Some key places for investments into your home are the front door, the kitchen, and the bathroom. These items always yield a higher return for the homeowner. A common misconception is that a pool generates a higher return. While a pool is an attractive selling point, a pool only increases the value by approximately six thousand dollars and very few reputable pool companies start building at less than twenty thousand dollars.
Now that we have discussed advantages of homeownership, it is time to discuss disadvantages. Owning a home costs money and there is always something that develops requiring your time, money and energy. It is a good idea to design a plan for the unexpected so that you will not be left financially depleted should a problem occur. As a renter, your Management Company or landlord performed all repairs and maintenance. Those days are over as you become the owner, and all those responsibilities now fall on you. It is also more difficult to move around if you are a homeowner. Much more than a two-week notice is required. Finally, there are absolute requirements that have to be fulfilled. Along with utilities, there will also be property taxes, homeowners insurance, mortgage insurance and your house payment that will have to be maintained. If your house payment is not met, your mortgage company can sell or foreclose your property. Not only will you lose your home, but also you will lose all the money you have invested into your home and ruin your credit rating. As we stated before, purchasing a home, is probably one of the biggest decisions you will have you make in your life and it should not be taken lightly.
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