Should You Rent or Buy?

Understanding the Advantages of Being a Homeowner

It’s true – there are some major advantages that come from being a homeowner. For instance, you are investing in an asset with the potential to appreciate, not just paying a landlord. Also, there are a lot of government benefits for homeowners, beyond the $ 8,000 tax credit that’s currently offered. When tax season rolls around, you’ll also be able to deduct the interest on your mortgage, your property taxes and many other financial elements against your annual income.

However, homeownership isn’t for everyone. There are a lot of reasons why you aren’t ready to make that leap yet. Let’s look at a few:

How Big is Your Bank Account?

Buying a home isn’t just trading in your monthly rent for a mortgage check – there’s a lot more that goes into the price of buying a home. Before you even set foot in your new home, you’ll have to pay for home inspections, appraisals and the closing costs that are part of the home buying process. And, unfortunately, the fun doesn’t stop once the deal is finished.

Also, consider if you’re going to be able any repairs once you have settled in, because they may be waiting for you. As a renter, your landlord takes care of things like leaky faucets, malfunctioning appliances and more serious repairs, including roof, siding and foundation problems. As a home owner, the ball is in your court to get these problems handled, and they get expensive. When considering homeownership, take time to figure out if you’d be able to afford up to $ 1,000 of repairs at any given time.

How Stable is Your Life?

Are you ready to commit to staying in a definite area? Is it possible your job might require you to relocate any time soon? The stability of your lifestyle is another important consideration to make before you start shopping for a home.

Most experts recommend not buying until you’re ready to spend three years in the home, as it will take that long to turn a profit on the sale after expenses like realtor commissions are taken into account. Some analysts are extending this recommendation to five years, given the recent turmoil in the financial and real estate and housing sectors. But regardless of which prediction is correct, the end result is the same – don’t buy a home until you’re ready and willing to commit to one place for several years.

So What Should You Do?

Becoming a homeowner isn’t like buying a Coke. Now is a great time to buy a home, as prices are lower than ever and there’s plenty of inventory along with government incentives for first time homebuyers and people looking to move. If it’s something you’re considering at all, make an appointment with your real estate agent and a mortgage lender to learn more about the home buying process.