Buying a home is an exciting decision and there are several terrific reasons to becoming a homeowner. Homeownership brings pride and satisfaction; you will be typically building your personal equity, get potential tax breaks and redecorate and renovate the way you like. With all the benefits of owning your own property, buying a home is not for everyone. Consider your plans for the foreseeable future and you can determine if renting might be a better option for you at the moment. I’ve got some excellent tips to help you figure out what’s right for you.
Homeownership Financial Timeline
If you have your finances in order and you have a loan with mortgage payments you’re comfortable with, the decision to buy or rent comes down to what your plans are for the foreseeable future.
The first year of homeownership is usually the most expensive, not counting the upgrades or repairs you may want to make to your home some time in the future. Your mortgage payment is usually more than your current rent, assuming you buy in a similar area and home style. More importantly, on your first year of homeownership, you’re also responsible for a handful of one-time expenses, such as your closing costs and moving costs.
Because of these one-time expenses, if you think you’re going to be moving again in the next few years, now may not be an ideal time for you to buy a home. While property values tend to go up over time, if you sell just a few years after buying, your home probably won’t increase in value enough to cover the additional one-time expenses, and you may end up selling at a financial loss.
Normally, the longer you own a property, the more financial benefits it brings. This is because rents tend to rise and if you have a fixed rate loan, your mortgage payment will remain relatively the same. This means that eventually, your mortgage payment will be lower than rent for a similar property.
If you’re planning on staying put, buying a home might be the right decision for you. Remember that the value of properties typically increases over time, which is how many homeowners can ultimately sell their home for more than what they invested. If you see yourself as a long-term homeowner, the probability that you’ll sell at a financial gain would be greater.