Purchasing a home will likely be the biggest financial decision that you will make so it is essential to set yourself up for success and be sure that it is the appropriate time for you to buy. You must take into account your lifestyle and financial goals when considering purchasing a home.
Benefits of Owning
There are many benefits to owning a home as opposed to renting. One benefit is that you build equity as you pay down your mortgage. In other words, as you pay down the principal you are that much closer to owning your home outright.
Generally speaking, purchasing a home
is a good investment. More times than not a home appreciates in value or is worth more when you go to sell it than when you buy it. This obviously is not always the case and there is some measure of risk associated with it. When you own your own home there is obviously more privacy. You can customize your home as you wish, without a landlord’s approval. There is a sense of stability. You van lock in an interest rate for 5 years or longer if you wish, so you know how much your payment will be. When you rent, your landlord has the ability to increase what they charge for rent.
Benefits of Renting
You will have little to know maintenance of the property. Your landlord will be responsible for maintaining the home which can get quite expensive.
It is a major commitment to buy a home. If you decide to move it can take time to sell your home and you might not have the necessary equity to make money or break even. A good rule of thumb is if you are planning on staying in one place for less than 5 years, you should rent. You have more flexibility when renting.
Although rent can be quite high, you are still likely to have more financial freedom. You won’t have to be concerned with property taxes, mortgage payment, home insurance (should have tenant insurance), and maintenance costs.
You will have less privacy. Your landlord will have to approve any renovations if they will allow them at all. There is less opportunity to customize your home and make it “yours”.
Although owning a home can be very rewarding, both personally and financially, it is not for everyone. It is important to evaluate your lifestyle and financial goals before deciding on such a large purchase.