Owning a home is a huge, lifelong goal for many people.
Buying a home has several advantages, that’s why a large percentage of individuals and families want their own property.
Renting a home comes with perks too. Renting might be necessary due to economic reasons or property and land shortages.
Identifying the advantages of buying a home is vital, especially if you plan to own a property soon.
That’s why this article provides details on major advantages of buying a home instead of renting one.
All the information in this post makes deciding to own or rent a home easier than ever!
3 Major Advantages of Buying a Home
There are several advantages attached to buying a home. Here are 3 of them.
Buying a home is a valuable investment
Buying a home is an investment. The money spent each month on a mortgage accumulates towards equity, and you also receive some great tax benefits for owning a home.
Your home will increase in value overtime, helping to build your wealth with equity.
What is Equity?
Equity is the difference between what you can sell the home for and what you owe
Equity grows as you pay down your mortgage. Over time, more of what you pay each month goes to the principal balance on the loan rather than the interest, building more equity.
If renting a home, you walk away with nothing in your pocket.
In other words, the home you buy becomes your property, as opposed to renting, where you never own anything aside from the things you’ve purchased to store in the rental.
By buying a home, you are investing in an asset for yourself and your familty, rather than a property management company or landlord.
More control and enjoyment when you own a home
Buying a home affords you greater control over your immediate environment that eclipses a rented space.
You can determine how long you spend in your home, the extent and form of renovations.
You can rent out your space, paint your walls orange, etc.
You don’t need approval from a landlord to make any changes to your home.
Buying a home guarantees freedom that’s not easy to secure in a rented property.
When you own a home, you don’t need to worry about your monthly payment increasing
Many home buyers use a fixed rate mortgage to purchase their property.
Securing a fixed rate mortgage comes with significant benefits for first-time and experienced home buyers.
With a fixed rate mortgage, you won’t have to worry about being able to afford the place you live in due to increasing mortgage payments.
A fixed rate mortgage means you’ll pay the same monthly amount until the mortgage is paid off.
With renting, the rental payment can increase year over year.
Property taxes or homeowner’s insurance can change, but that typically doesn’t happen as often as rent the increases.
5 Vital Points to Consider Before Buying a Home
These points need close consideration if you plan on buying a home instead of renting one.
Ignoring these points could create unnecessary expenses that may lead to money going down the drain.
1. Savings $$$
Buying a home costs money, and many home buyers rarely pay the entire home’s value out of pocket.
Savings play a vital role in most high-dollar purchases along with other vital factors.
There are several mortgages available for first time home buyers, and there are some no down payment options, but you still should have some cash saved for either a down payment, closing costs, and moving costs.
Saving for a home involves patience and discipline.
Here are some additional resources that’ll help with your home buying journey:
2. Duration of Stay
How long do you plan to live in the property? A year? 6 months or less?
You’ve got to consider how long you are going to stay in a home before deciding to buy it.
If you plan to live in a property for a year or less, it’s not a great idea to buy, unless you plan on renting it out.
The rule of thumb is buy a home if you plan to live in it for at least 5 years.
The financial commitments involved
Besides requiring decent savings that amount to thousands of dollars, buying a home is financially draining. You’ll have to make several significant financial commitments before, during, and after the purchase.
Major expenses necessary to buy a home include:
- Closing Costs
- Down Payment
- Moving Costs
- Inspection Fees
- Appraisal Fees
- Mortgage Payments
3. Difficulty in securing the right home
Finding the right property on sale could be a tough task, particularly in markets with massive housing demand as we are seeing now (sellers’ market).
Searching for properties to buy could take several weeks or longer.
With the low demand, sellers are getting multiple offers on properties. Buying a home in a sellers’ market will require a lot of patience.
If you are in a hurry, a rental may be a better option for you, since you’ll be able to find a home to rent a lot quicker than buying one, and will have less stress and frustration.
4. Do you have stable employment?
Buying a home is one thing, but managing the expenses that accompany homeownership is something else entirely.
Financial commitments required to own a home could be expensive.
Stable income is important to manage your home properly and pay for all expenses without stress.
You must have a steady flow of income to pay for your mortgage each month.
Failing to maintain a stable stream of income to pay the mortgage could put you at risk of losing the home
There are other expenses that can randomly come up, for example a broken dishwasher, or getting a new washer and dryer, or a plumber to fix a leak.
Many things can happen, and you won’t have a landlord that can fix these problems for you.
Buying a home means that it is your responsibility to fix these items
5. What does your credit look like?
You need a decent credit score if you’re looking to purchase a home.
Most of the home loan programs require at least a 620 credit score.
The higher the score the better the terms.
If you think your score is lower than 620, you may want to talk to a loan officer to discuss what your options are and if you need to work on improving your credit score to qualify for a mortgage.
Improving the credit score does take time, so it’s important to get on this quickly.
Are you ready to get pre-approved? Getting pre-approved for a mortgage shows sellers that you’re serious about buying a home and that you can afford it.
Most realtors won’t show you property unless they have a pre-approval letter in hand.
Are you ready to apply? Start the process by completing the form below.
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