Tag: home buying

Home Ownership Pros and Cons

home ownership advantagesOwning a house is very different from renting. Understanding some of the key benefits and drawbacks of buying a house can help you decide if this is the right approach for your family. From the amount of money needed upfront to annual tax savings and even maintenance costs, here are some of the home ownership advantages and disadvantages.

Home Ownership Advantages

Build Wealth: For most of us, our home is our largest investment and one that increases in value over time. When you purchase a home, you naturally build equity as you make improvements and pay off your mortgage.

Tax Savings: The property tax and interest you pay on a home you own is tax deductible. This can add up to significant savings for you each year at tax time. If you make green improvements to a home you own, you’ll not only reduce your carbon footprint, you’ll get additional deductions as well.

More Control: From the ability to paint your rooms whatever colors you like, have as many pets as you want and even decide if you want to upgrade your exterior, when you own the home, you have creative control. You also don’t have to worry about a landlord selling your home before you are ready to move.

Privacy: Perhaps you don’t like the idea of a nosy landlord. You may simply want your own space that you don’t have to answer to anyone else about (except the bank). Either way, owning a home is the right way to go.

Advantages of Renting

No Maintenance Costs: If the air conditioning breaks, the fridge stops working or there is a plumbing fail, you’re not responsible for the repair work.

Lower Upfront Cost: Depending on the mortgage product you are interested in, renting can be less expensive up front than buying. Some loans, including VA loans are equal or even less than the cost of renting.

Flexibility: That downtown location may have seemed like a great idea when you rented the house. But now, a year later, you’re ready to move on. As a renter, once your lease ends, you’re free to move. A house will have to be sold or rented out before you can move on.

Affordability: In some markets, you can get more house or space for your money when renting. Buying could result in a higher monthly payment.

Bundled Services: Some rental locations provide utilities and other services, from trash pick up to lawn care. These additional services can save you time and money.

Home ownership advantages at the right time will ensure that you can build wealth and thrive in a home you own. For some people, renting may be the best option for now. It’s a good idea to regularly review your personal needs and goals. This process can help you decide which model is best for you and help you make the best possible decision for yourself and your family.

Saving for the Down Payment on a Home

home buyingPurchasing dream home can be a reality in life, but the down payment may be a formidable obstacle. In today’s real-estate market, many lenders require a 20-percent down payment for home buying.

A home that’s worth $200,000 would require a $40,000 down payment. Don’t let this number scare you off, however, because you can save up the funds with some careful planning.

Home Buying: Tips To Save Up For Down Payment

Cut the Nonessential Elements

Sit down with your significant other and carefully analyze your spending habits. Cutting a few dollars from each day in the span of a month can create ample funds in no time.

Buying coffee, getting a pedicure and other nonessential elements should be removed from the budget. Purchase generic items at the grocery store instead of the more expensive brands. When you cut down on small items, your savings will increase. Continue to focus on your core objective so that you’re always motivated to stay in budget.

Bank Surprise Income

When you realize that there’s extra money in your bank account, the first reaction is to spend it. Try to think of that money as a savings booster and move it immediately into a savings account.

Allow it to gain interest so that your money is working for you. Income-tax refunds, promotion bonuses and other funds should be treated in this same manner. Your down payment will accumulate a lot quicker when you curb any extra spending of that surprise income.

Work Toward a Promotion

Many people simply need some encouragement to strive for that promotion at work. Saving for a down payment for home buying is definite motivation. Apply for the position, and make yourself an example.

Work hard with precision as your goal. When supervisors see your loyalty and perseverance in a current position, they’ll equate that passion to a possible promotion.

If you earn the promotion, ask about pay increases and bonuses. All these funds should be immediately placed in a savings account to further your down-payment goal.

Be Logical About Withdrawals

Don’t be tempted by funds in your retirement account to pay the down payment. Removing money from any retirement account only compromises your future comfort and costs dearly in penalty fees.

Consider this money to be off limits unless it really is for retirement needs. This may mean that you have to drain most of your personal savings, but these accounts can be replenished with no charges to the funds.

Some families may want to turn to loved ones and borrow money. Although this situation can be beneficial, be aware that these funds need to be paid back.

If the money isn’t returned, your loved ones will technically own your home. Ideally, use your own savings to secure a home. The value will only grow in time.