Buying Your Home

Buying a home is exciting! Many people view homeownership as having security, a stepping-stone to financial freedom.

Some of the benefits to consider:

• Owning a home takes a lot of work, money, and commitment, but the rewards are very enriching. It’s easy to get caught up in the open houses and real estate ads without fully thinking it all through, so be sure that purchasing a home is what’s best for you in your current situation.

• Owning a home will force you to build up your assets, even if you have no other savings or investments. You will gradually pay down your mortgage, and over many years, this equity can amount to much more than you might otherwise be able to save. Property values generally, but not always, increase over the years, adding to your net worth.

• Owning a home can protect you from inflation. Home values tend to keep up with or slightly surpass inflation rates. You won’t have to worry that a landlord might increase the rent amount for the next lease term. While the renter may see his rent bill increasing over time to keep up with the rising cost of living, your mortgage payment will stay the same if you go with a fixed rate mortgage, or at least it will rise a predictable rate with an adjustable rate mortgage.

• Owning a home can be financially smarter in the long run than renting. It takes a couple of years to recoup those closing costs and fees, and the real estate agent’s commission should be considered when you sell. If you plan on moving in less than a few years it probably isn’t ideal to buy, but if you know you’ve found your home-sweet-home, then owning that home can pay off.

• Owning a home gives you the freedom, within city and HOA regulations, to improve or expand your home, and landscape to your heart’s content. You can have a big garden, paint your house the color you want, and build a deck. You can have the pets you want without the restrictions that a landlord might impose.

• Owning a home provides a tax benefit.You are going to pay a lot of interest on a mortgage if you plan on financing your home like the rest of us. Those interest fees are tax-deductible, saving you money when it comes time to pay Uncle Sam.

• Owning a home is a gratifying experience if you keep up with the required maintenance and repairs.The pride of ownership is evident in homes that are well maintained and beautifully landscaped. It is deeply satisfying when you do something to make your home just a little bit nicer. Planting a new tree or finishing a project will make you proud of the work you’ve accomplished, and the rewards will be enjoyed for as long as you own your home.

There are many details to consider when buying a home; one bad choice can cost you a lot of money or become an ongoing headache. Think everything through before you commit to one of the biggest purchases of your lifetime:

Location, location, location
You’ve heard it many times before if you’ve done any research on real estate. The perfect home can be ruined by the wrong location. Being convenient to work, play, and shopping is obvious, but don’t forget to consider the not so obvious; will the location make it hard to resell the property one day? Is the home on the corner of a busy intersection, making it hard to even get out of the driveway? Do the neighbors take good care of their properties, or does it look like the neighborhood is going downhill? You might think the sound of an early morning train everyday is romantic, but will the future homebuyer feel the same way?

The right financing
There are financing options available - some good, some not so good, and some are downright predatory. It’s important to keep your credit rating high so you have access to loans with the best possible terms, but even people with not so great credit can get a home loan. Check with different mortgage lenders regardless of your credit; shopping around can pay off. If you’re a first time homebuyer, there are programs to help you get into a home with little or no down payment, see if you qualify. If you are building a new home, the builders may have their own financing and incentives.

The right size
It’s not too hard to figure out how many bedrooms and bathrooms you need now, but will your home be the right size for your family in a few years? You need to stay in your home long enough to come out financially ahead; you’d hate to have to sell it before then due to a change in family size. A newlywed couple doesn’t need much space, but if you plan on having children someday, it’s nice if you can get a home big enough to accommodate your future children. Your kids might be nearly grown and out of the house, maybe it would be better for you to buy a home with smaller bedrooms so you could enjoy extra square footage where you’d really use it.

The right options
Do you want a pool, a big backyard, lots of windows, or high ceilings? If it’s important to you, don’t stop until you find the right home. Every house is different in some way, and you might have to give up a desire here and there to stay in your price range, but don’t settle on a house that just isn’t what you want. New properties will always be put on the market, and you should buy a home you’ll love. It’s easier and more rewarding to take proper care of a home that you’re proud of, rather than one you just settled with because you’re in a hurry to become a homeowner. If you just buy a house for the financial reasons, it may someday feel like a prison rather than your own personal retreat.

The right point in your life
You might want to delay purchasing a home if there’s any uncertainty in your life. Is your job stable? Don’t take on a big home mortgage if there’s any chance you won’t be able to make the payments. Do you think there’s a chance you might be transferred out of state? You don’t want to deal with selling a home at a loss because your job requires you to move away. Are you looking at getting married soon? Two incomes will get you a bigger loan and a better house, and it could be better to wait until you combine those incomes than to buy a home you’ll soon outgrow.