Is now the right time for you to buy a home? You have many options to consider and choices to make. Buying a home is a big responsibility, financially and emotionally, but most people want to own a home. Home-ownership often is referred to as “the American dream.” Why is it so special? Among the reasons: Real estate often is an excellent investment, perhaps the number one source of wealth—building for families.
Owning a home has many benefits.
When you make a mortgage payment, you are building equity – and that’s an investment.
Owning a home also qualifies you for tax benefits that may assist you in dealing with your new financial responsibilities — such as homeowners‘ insurance, real estate taxes, and upkeep – which can be substantial.
But given the freedom, stability, and security of owning your own home, they are definitely worth it! Owning your own home also can be a great source of pride and stability.
But homeownership may not be for everyone.
It’s a big financial commitment – starting with the initial shock of your purchase (including a “down payment” and fees paid to a real estate agent, the lender‘ and others) followed by years of monthly mortgage payments, real estate taxes, property insurance and maintenance costs. When you decide to purchase a home, you accept responsibility for paying for these expenses. They are additional costs to your monthly mortgage payment and should be included in your budget estimates:
- Property Taxes and Special
- Assessments . Home/Hazard .
- Insurance. Utilities. Maintenance .
- Home Owner Association (HOA) Fee if applicable.
One of the advantages of renting is being generally free of most maintenance responsibilities and moving almost as soon as you decide. But by renting, you lose the chance to build equity, take advantage of tax benefits, and protect yourself against rent increases. Also, you may not be free to decorate without permission and may be at the mercy of the landlord for your housing needs.
- There are many considerations in choosing between renting and buying:
- Do you want to spend several years in a house and in a neighborhood?
- Do you enjoy lawn and garden work?
- Might you need to move suddenly to care for family?
- Do you want to keep your assets accessible in the bank, or do you want to invest long-term in a home?
There are tax advantages to homeownership in both the short and long terms. The mortgage interest and real estate taxes are tax deductible, which allows you to subtract part of your housing-related expenses from your taxable income, which could reduce your tax bill. In many cases, the amount of money a renter spends on rent can be about the same as or less than the amount a homeowner spends on a mortgage. With the tax benefit for homeowners, the savings can be significant.
Buy vs Rent – Pros and Cons
Advantages of Buying
- Property builds equity Responsible for
- Sense of Community, stability and security
- Free to change decor and landscaping
- Not dependent on landlord to maintain property
Considerations When Buying
- Responsible for maintenance
- Responsible for property taxes
- Possibility of foreclosure and loss of equity
- Less mobility than renting
Advantages of Renting
- Little or no responsibility for maintenance
- Easier to move
Considerations When Renting
- No tax benefits
- No equity is built up
- No control over rent increases
- Possibility of eviction
Get financing from a qualified home mortgage broker
Because of our several years of experience and a rolodex full of satisfied clients, Fairfax Mortgage Investment brokers pride ourselves on the ability to provide assistance in our local market. We are here to assist with acquiring your home with proper financing when you are ready to buy. If you would like to learn more regarding how to finance a home after renting does not seem like the best option anymore, please call or reach out to us using the contact form with any questions. We would be glad to help.