Seattle, Washington, United States, November 8, 2023 – Many people make the biggest financial decision of their lives when they buy a home. It is important to make sure you are the type of person who can be successful as an owner before you make a substantial financial investment in a house.
You may want to consider the pros and cons of buying a house before making your decision. A professional mortgage lender can help you decide whether you are ready to buy your own home.
Advantages of owning a home
A home’s biggest advantage traditionally has been its long-term financial stability. Since the housing market in America almost always improved in value, owning a home during this time represented stability, as well as a means to borrow money when necessary.
In addition, there are inherent advantages, such as control. If you want to expand your family, you can add a room or a bathroom to your home. You can also expand the kitchen. Your driveway can also be widened to accommodate more cars as your family grows. Home ownership also offers tax benefits and other financial advantages.
Long-term investment
According to the Federal Reserve Bank of St. Louis, the average price of a U.S. home has increased by 80% from 2012 to 2022. Many homeowners who decided to sell during the past decade were able to gain impressive equity from the market growth. There have been periods of decline and flatness in the price of homes throughout history. It is possible for homes to lose value, but it does not happen very often. In the long run, housing is one of the most reliable investment sectors.
Low Interest Rates
Interest rates are no longer at rock bottom. A constant hike in the prime interest rate by the Federal Reserve helped stave off inflation. Nevertheless, it has come a long way since the 1980s (12-13%) when it was at its highest. Additionally, rates vary based on a borrower’s credit score and location.
Equity Building
Equity is the difference between what you owe and what you can sell your home for. The amount of equity you have grows as your mortgage is paid down. Eventually, you will pay less interest and more toward the loan balance, thus building equity.
Federal Tax Benefits
Home equity loans, property taxes, mortgage interest, and some closing costs can all be deducted on the first $750,000 of the purchase price of the home, as well as interest on mortgage loans. Due to the increase in the standard deduction to $27,700 for married couples ($13.850 for singles), itemizing interest deductions has become more challenging. If you calculate all these numbers before purchasing, you will be able to determine what tax benefits you can get.
Greater Privacy
When you own a property, you have the option to renovate it to your liking, which renters do not have. This can include installing new security features, adding personal touches, and adding a pool or hot tub. Additionally, the privacy of your own home is much greater than that of a rental, as you have more control over who comes in and out.
Stable Monthly Payments
You’ll pay the same interest and principal amount every month until you’ve paid off the mortgage. It is possible for rents to increase at every renewal of a lease. In most cases, rent increases are more frequent than fluctuating property taxes or homeowner’s insurance.
Stability
The difficulty of purchasing, selling, and moving tends to make people stay in homes they buy longer. It is important to buy a home with the confidence that you will live there for many years to come.
Disadvantages of owning a home
Home ownership has a number of disadvantages, primarily permanence and financial uncertainty. When you buy a new house, you have to pay a lot of money out of your pocket at the time of purchase. The price of a home may not rise later on. The accumulation of home equity can take years without a large down payment. Here are the other cons that come with owning a home.
High Upfront Costs
Typical closing costs on a mortgage range from 2%-5% of the purchase price, including a variety of fees, property taxes, mortgage insurance, home inspections, homeowner’s insurance premiums for the first year, title searches, title insurance, and points. Recovering those costs can take about five years.
Less Mobility
When homeownership offers stability, it may be more difficult to accept a job offer that requires you to pick up and move to another city. A counterbalance to this concern is the speed at which homes are selling.
Maintenance Costs
For those who try it the first time, fitting under the kitchen sink to repair a leak is a joy (not). Homeowners are the first line of repair – especially if they want to save money by doing it themselves. There are some items that require professional attention.
Equity Doesn’t Grow Immediately
You don’t gain equity quickly in the early years of a mortgage since most of the payments go toward interest – and that has happened in many areas after the pandemic. If it fits their budget, those who want to build equity faster can add a small amount to their principal each month. Adding $20 to $50 extra to the loan principal each month can make a difference.
Falling Property Value
In 2008, this happened as a result of a nationwide housing crisis, but local conditions can also contribute to this. The value of your building will decline over time, especially if you don’t maintain it.
Continuing Costs
It’s still necessary to make mortgage payments and maintain your home while you’re selling it. You will pay for two homes if you buy another before you sell your own. Despite the post-COVID sales fervor, sellers were able to unload their properties faster.
Is it the right time to own a home?
The decision to own a home comes with its own set of pros and cons, and the choice ultimately depends on your individual circumstances, financial situation, and personal preferences.
Contact Details:
Name: David
Company: Mortgage Dove
Email: service@mortgagedove.com
Phone: 800-605-3128
Website: https://mortgagedove.com/
Address: 701 Fifth Ave 42nd Floor, Seattle WA 98104
