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Is home ownership the right path for you? Should you rent instead?
If you rent will you be jeopardizing the possibility of home ownership
in the future due to rising real estate values? How fast will your
family grow and how much space is needed for your family and their
activities? How much money do you have to pay for housing? When
is the best time to buy a house?
With the rising cost of home ownership in America today, combined
with low mortgage rates, many first time buyers face are challenged
by the answers to these questions.
The ADVANTAGES of renting
The DISADVANTAGES of renting
The ADVANTAGES of owning a home
The DISADVANTAGES of owning a home
The following topics should help make your decision a little easier.
The ADVANTAGES of renting are as follows:
- You are excused from the bulk of home ownership responsibilities
such as:
- Grounds maintenance
- Appliance repairs
- Remodeling
- Home Improvements
- Property taxes
- Your rental many include amenities such as:
- Pool
- Tennis courts
- Social/activity rooms
- Laundry facilities
- Security
- Parking
- There is no down payment, only a security
deposit.
- Many of your monthly expenditures (rent, utilities) are fixed
making budgeting easy.
- You are not taking any equity risk
on the property should there be
a downturn in
the market
- Close proximity of neighbors often
create a sense of security.
- If you do not like where you
live, moving is relatively
simple.
- It is easier, especially if
you travel/commute often.
The DISADVATAGES of renting are as follows:
- No special tax deductions.
- There are no equity gains in the rising value of property.
- Space and storage is usually less than a home.
- Changes to accommodate your life or growing family cannot be
made or are limited in scope.
- Rents can rise with inflation and or supply and demand
in the rental market.
- You will probably have restrictions on noise level,
pet ownership, or children.
- Advantages and disadvantages of buying a home
The ADVANTAGES of buying a home:
- The home may increase in value, resulting in a significant gain
in net worth.
- The emotional high derived from ownership and the sense of
status created both at home and in the community.
- Homeowner's tend to have better credit ratings.
- The longer you live in a home, the more equity you build
that can be leveraged using an emergency loan.
- Mortgage payments contribute to an investment, particularly
if the property is located where it increases in value
over a period
of years.
- If you have a fixed loan, your payment will remain
relatively constant for the life of the loan.
- The interest paid on your loan and taxes are legitimate
income tax deductions.
- Ownership may contribute to security, especially
in retirement years when income normally decreases.
- A homeowner can borrow against his/her equity,
as the value of the home increases.
- More space may be available for family members
and their activities.
- As a homeowner you have the freedom to make
improvements and changes to the home and
surroundings as desired
(although a development
or association may have restrictions and
prohibitions).
- Home ownership can contribute to the general
well-being and sense of "roots" of the family, especially for children.
- Homeowners generally are concerned about
community affairs and how they may
affect their property.
The DISADVANTAGES of owning a home
- A down payment may be needed.
- Owning a home requires a substantial commitment in time, emotions,
and money.
- Homes may decrease in value if the neighborhood deteriorates,
changes quickly, or the real estate market suffers a decline.
- Due to the initial expense of buying a home, financial
resources may be limited or reduced for other purchases
or activities.
- Maintenance and repairs are inevitable and could be costly.
- Part of home ownership includes procuring enough income
to afford insurance of all kinds including loss of
the house
as a result
of a natural disaster.
- Budgeting is cumbersome and a must in preparation
for maintenance, repairs, home improvements, and/or
home
ownership/association
dues.
- Depending on where you live property taxes could
increase dramatically.
- The cost of buying a home should also include
the cost of moving into it and furnishing it.
- Shifts in the neighborhood could drastically
affect ones lifestyle.
- Security is an issue if you are not home
often due to travel.
- Unexpected loss of income due to job termination
or unemployment may limit money available
for home ownership
costs.
Decisions, decisions. The very best way to proceed
is to list all the factors about your life that are important to
you and.
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