Making the Transition from Renting to Buying
Here are a few points to consider as you weigh the pros and cons of home
ownership.
No doubt you've thought of how nice it would be not to write a rent
check every month, but have you done the math? Nothing can make you feel more
secure than owning your own house, unless buying a home will create financial
problems of its own. Here's a discussion of the most important financial costs
associated with home buying to stack up against your monthly rent check.
Instead of the standard deduction on your income tax return, most homeowners
itemize their deductions, allowing them to deduct the following (and save on
taxes): home mortgage interest, property real estate taxes, state income taxes,
gifts to charity, medical and dental expenses over 7.5% of your income, personal
property taxes, and most moving expenses.
Figure your monthly payments if you were to buy. Compare your monthly rent to a
calculation of the following: purchase price and down payment of your home, your
annual income (and debt!), property tax rate, home insurance rate, interest rate
and length of loan. For best results, contact a home-buying specialist.
Other Costs
Expect other costs to home owning. Along with your monthly mortgage and down
payment, there's property tax and homeowners insurance premiums, and fees known
as "closing costs." These include everything from a credit check to "points"-
interest paid up-front in return for a lower interest rate. Others: title
insurance fee, survey charge, attorney/escrow fees, and loan origination. So do
your research!
Long-term Equity
No discussion of home ownership is complete without considering the long-term
benefits of owning. What your house will be worth when you sell depends on the
state of your mortgage and the housing market, in particular. Consult with real
estate professionals, read up, and do your math to get a realistic sense of your
future home value.
Lifestyle and Mobility
Mobility is part of renting. Freedom to take the next job or move for a
relationship is easy to come by when you rent a home. And when you do move,
there's often more choice of specific location, and price, when you seek rental
housing. Want an apartment near a park in western Philadelphia? You may find an
easier time looking to rent than buy.
Many renters say they love knowing they're not tied down - and don't have to
assume financial responsibility for their living space. This is of course a big
difference from home ownership: who does the work.
Who Does The Work
While you don't receive the joys of making a place truly "your own," you do have
limited costs in renting. Landlords are responsible for general upkeep and
safety, allowing you to focus on the fine points. Home owning, in contrast, puts
you in the driver's seat. You shoulder the expenses and reap the rewards of home
improvement - both great and small. Think about whether you want to put in
additional time and money.
Choices, Choices
Whether you decide to take the step of home ownership is a personal choice with
its own ups and downs. Hopefully we've helped dust off the magic ball a bit;
what you see in your future is up to you!
Source: Realtor.com
COMMERCIAL.gif){kind=spacer}
