So You Want to
Buy a Home?
Taking the plunge into home ownership can be a
rewarding step for many first-time home buyers. Before you take the plunge, look
before you leap. Homeownership is not for everyone.
Take into consideration the pluses for renting versus owning
Monthly costs: renting can be more cost-efficient than owning if
utilities are included. The monthly cost of owning is usually more than renting after you total the
cost of mortgage, maintenance, taxes, and utilities.
Features
some rental apartments offer
amenities that are not found in smaller condo/co-op buildings or single-family
houses such as 24-hour door attendant, dry cleaners, or a grocery store. Unless
you purchase in a full-amenity building you will most likely have to go off-site
for some services you are accustomed to having only an elevator ride away.
Maintenance and Repairs
Renting allows you
the luxury of repairing or maintaining nothing; if the air-conditioner breaks
you call the manager. With owning you either repair the air-conditioner or
locate, meet, and pay a repair-person.
Mobility
Renting offers you the convenience
of leaving your home when your lease expires. When owning you are tied to other
persons' timeline of moving when a buyer or tenant agrees to a date, which might
not fit your timeline.
Take into consideration the pluses for
owning versus renting: -Equity: Renting has no equity benefits. Owning provides
a forced savings because typically each monthly payment is part principal, which
builds your equity. Potential property appreciation can also increase your
equity. Note: If property values decrease in your market you could owe money
when you sell.
Control over your environment
A lease may not
allow you to have pets, paint your walls red, or have a roommate. With owning
you can choose a building or home that allows you to have pets, decorate to your
taste, have roommates, or add a washer and dryer.
Stability
Your landlord can increase your
rent, sell the property, or convert your rental to condos and force you to move
on short notice. With a fixed-rate mortgage, you can control your monthly
housing expense and have peace of mind that you can stay as long as you want.
Tax benefits
Renting offers none. Owning
allows you to deduct mortgage interest and home equity interest from your
taxable income. Consult a tax professional for more information.
Recognize that renting might be a better option for you in the
following situations
If you are in a life transition. such as recently widowed or
divorced, it will offer you flexibility.
-You do not wish to have repairs or maintenance
responsibility.
-You have alternative investments for your down
payment funds.
-If you frequently travel for business or
pleasure, renting gives you the freedom to lock up and go away, worry and
responsibility free.
-Your company is considering relocating you in
the next 20 months.
-Your company is considering downsizing its
employees, merging with another company, or selling to new ownership.
-The real estate market you want to buy in is a
seller's market, major employers are leaving town, or uncertainty about proposed
development could effect housing prices in a negative way.
By
Mark Nash
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