Home Ownership Benefits Vs Risks

Home Ownership Benefits Vs Risks



Home Ownership: Benefits Vs .​
Risks
Sure, it’s tough to​ pull the trigger and​ buy a​ home, especially as​ a​ first-time buyer .​
The big hit of​ covering both a​ down payment and​ closing costs is​ enough to​ scare any prospective buyer into staying a​ renter .​
When you​ combine the fact that you’ll be responsible for​ any fixes the house needs and​ that it’s pretty difficult to​ just pick up and​ move, owning your​ own home gets more frightening by the minute .​
But fear not, the advantages of​ owning a​ home far outweigh the risks .​
So if​ you’re already looking for​ a​ home, continue to​ do so .​
if​ you’re a​ renter, it’s time to​ reconsider.
Benefits:
Save big on​ taxes.
When you​ own a​ home you’ll have to​ pay a​ mortgage and​ property taxes .​
It stinks, we know .​
However, the interest on​ those bills can help .​
They’re fully deductible for​ both federal and​ state income taxes .​
The first few years of​ your​ mortgage payments mostly go towards interest, which means a​ big-time deduction​ for​ you​ .​
As a​ plus, many times all costs associated with buying a​ home—including those involved with your​ loan application​ and​ home appraisal—are usually deductible.
Equity is​ your​ friend
Put simply, equity is​ the appreciation​ of​ your​ home’s worth over what you​ owe on​ it .​
That’s money in​ your​ pocket; money you​ can’t accumulate if​ you​ continue to​ rent .​
Stats show that homes have appreciated in​ value every year in​ the United States since 1968 .​
That includes years of​ economic downturns and​ recessions .​
What’s more, you​ can build equity my making improvements to​ your​ house that you​ can immediately enjoy, such as​ installing a​ pool or​ redoing a​ bathroom .​
You’ll reap those benefits further down the road when you​ sell your​ home.
Appreciate appreciation
The appreciation​ of​ your​ home’s worth is​ the single biggest contributor to​ your​ equity .​
Homes are considered a​ great investment over the long term due to​ their outstanding historical track record .​
The value of​ a​ home typically appreciates at​ the rate of​ inflation, plus an​ additional 1 to​ 2 percentage points .​
in​ booming markets, such as​ the one experienced over the past few years, home values can grow at​ a​ much faster pace—almost 9.4 percent in​ 2018 alone.
Own to​ borrow
Owning a​ home means more negotiating power for​ you​ .​
The more equity you​ have in​ your​ home, the easier it​ is​ to​ acquire a​ loan or​ a​ line of​ credit to​ fund home improvement projects, an​ investment property, or​ a​ big ticket item.
No more rental restrictions.
Owning means it’s yours .​
You’re free to​ do whatever you​ want to​ your​ new home (to a​ certain​ extent, of​ course) .​
Want to​ paint? Go ahead .​
Feeling the need to​ make those two rooms into one? Get the permits and​ go for​ it .​
Even better, owning a​ home means no noisy neighbors above you​ and​ no paper-thin​ walls which to​ share all of​ your​ most intimate details to​ perfect strangers through.
Sweet & Stable
A fixed mortgage rate means you’ll know exactly what your​ house payments are going to​ be up to​ 30 years from now .​
Even adjustable rate mortgages cap out at​ a​ certain​ level .​
Knowing what this—undoubtedly your​ biggest bill each month—amount will be well into the future can help you​ plan for​ further down the road .​
Renters have no such luxury, as​ their rent can—and​ usually does—increase yearly.
Risks:
Appreciation​ isn’t a​ guarantee
Though history shows long-term homeowners routinely reap the benefits of​ appreciation​ and​ equity, the housing market can—and​ has—slipped over the short term .​
Research the area in​ which you​ want to​ live and​ make sure any prospective neighborhoods show low crime rates and​ growing value.
It isn’t cheap
As a​ general rule, mortgage payments are usually more per month than rent .​
As an​ owner, you’ll also be responsible for​ maintenance and​ repairs—no more landlord to​ do that for​ you.
Menacing mortgage
if​ for​ some reason​ you​ can’t make your​ house payments, it​ spells big-time trouble .​
Lenders could foreclose on​ you, meaning you​ could lose the home and​ all of​ the equity accumulated so far .​
Renters, on​ the other hand, can usually just downsize to​ a​ smaller apartment if​ they find their monthly rent too much to​ bear.
Pick up and​ go?
Not so .​
Owning a​ home generally means fewer options when it​ comes to​ moving .​
Depending on​ the state of​ the market, it​ could take quite a​ while to​ sell your​ house .​
Waiting for​ escrow to​ close could prolong the process.




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