Is it Time to Buy a Home?

Every year, thousands of American renters wonder if the time has come for them to buy a home. It’s a tough decision, one that is plagued with worry and concerns. Will I get approved for a mortgage? Do I make enough money to cover the mortgage and taxes? What if I lose my job, how will I pay my mortgage? Owning a home is a huge responsibility, and it’s hard to know when the time is right to buy a home.

Renting versus Owning

If the reason you are looking to buy a home is for the investment opportunity, you may want to reconsider. While homes do appreciate, you may be better off investing in mutual funds or the stock market if you are simply looking for financial gains from an investment. That being said, you may consider owning over renting because of the taxpayer advantages. You can deduct most of the interest you pay on your mortgage, as well as real estate taxes you pay each year. If you have a home based business, your deductions are even greater.

Advantages of Renting

Renting has far less responsibility associated with it. For example, if something breaks in a home or apartment that you are renting, it’s the landlord’s problem. He or she needs to fix it or pay someone else to fix it for you. When you own the home, it’s your problem when something breaks! If you are struggling to pay your mortgage, taxes, and living expenses, you may have a hard time coming up with money when something happens- like if your pipes freeze in the winter or your floor needs replacing.

Advantages of Owning

In addition to the slight appreciation you’ll receive on your investment and the tax benefits, you will build equity as you make payments on your mortgage. Eventually, you can use that equity as cash if you ever needed to- so it is almost like a savings account. You don’t have to be concerned about your payments increasing drastically from one year to the next like you do when you rent, because a mortgage lender can’t make adjustments to your payment other than on an adjustable rate mortgage- and even then, the payment will increase only to compensate for a change in interest rates. In the end, it all comes down to whether or not you’re willing to take care of your own home. A home requires maintenance over a long term. It’s a huge responsibility that you must truly be ready for and willing to take- and if you are, the benefits of home ownership will far outweigh any disadvantages of owning.