Before Buying a Home, Read This
Many want to rush into buying a home these days because they hear that buying a home is such a great investment and is better than renting. Some of this information is based on sound advice while other information is misleading. Owning a home can be a good investment, yet sometimes the advantages of home ownership are over exaggerated. Thus, before buying your new home, there are a few things that you should think about. To read this article, click Before You Buy Your Home.
June 12th, 2006 at 10:23 am
[…] Things to Think About Before Buying a Home […]
June 22nd, 2006 at 2:38 am
You forgot to mention the tax benefits of owning a home and that unless you are using an interest only loan you are builing equity by paying down the mortgage instead of helping your landlord pay down his (or hers). It is often a no brainer if you are going to be in the home for more than 1 1/2 - 2 years. The time that it takes to make financial sense differs by area of course, but for most folks out there renting is not the way to go for yourselves, but instead for me…..your landlord.
June 22nd, 2006 at 7:57 am
My intent was to provide a more rounded picture of home ownership. Everyone points to the mortgage tax deduction and building up equity, making it sound like this is all that matters. Yet, they overlook other aspects. For example, I did not buy a home until I was 28 (when I could have done it years earlier). Yet, it was good for me because I was able to give 110% to work (not worrying about getting home to let the repair people in or to cut the grass) and I invested my money instead into the stock market (in the early 90’s) instead of a home. I still have a sizable net worth, yet it came from another source other than home ownership. And, in my area, the price of homes have only slightly increased, thus I was not shut out of home ownership either.
You do have good points about building up equity and the payoff period which many books and other blogs have addressed. That is why doing item (3) in the blog is important on costs of buying and renting. However, there are items that are not covered in these calculators. For example, a good friend of mine bought an older home and then sank more money into it to repair fire damage that happened in the 40’s or 50’s that was only discovered when they replaced their dinning room flooring. So, sometimes people need to be aware of the hidden costs of home ownership. And, the mortgage tax deduction on owning is also in renting as well because the landlord gets to deduct operating expenses (taxes and interest) from his tax return. If this was not the case, rents would be even higher. Yet as you said and as I concluded my blog “Owning a home will relieve you of paying rent where the rent includes a profit margin for the owner. ”
Thank you for reminding everyone again of the advantages of home ownership.