Timing is everything. This expression has been around for quite some time and can pertain to many different moments in life. But life is not always timed out perfectly and with good reason. Life would not be nearly as exciting if we knew exactly when or how things would evolve.
There seems to be a time frame in peoples’ minds of how and when major life events should occur. But rushing into decisions based only on time can lead to disastrous results. One major life event is purchasing a home which is not only a financial decision but an emotional decision as well. And making this decision at the wrong time can be quite stressful.
Buying demands less flexibility – When you rent, your lease is probably year to year, giving you the option of moving. But when you purchase a house, you should plan on being there for at least five years. In addition, the burden of selling the home may take longer than expected giving you less flexibility to move to a new location.
Buying demands your time and hard work. Most new homeowners spend time maintaining and improving their homes. This means “sweat equity” with much of the day-to-day maintenance falling upon you. In addition, the costs of hiring professionals for some of the work can be a major expense for most homeowners.
Buying includes additional costs such as insurance, property taxes and repair charges. These expenditures can be quite costly and far outweigh the mortgage payment increasing your monthly charges far above the cost of renting.
However, there are some benefits of buying a home as well.
You can make improvements and personalize your own space. Not only will a landlord prevent you from making changes, any changes you make will benefit the landlord. You would rather make the changes to your space and increase the value of the home for your own benefit.
Over time, the value of the home tends to increase (though there are downturns in real estate). The return on investment when it is time to sell will be yours to keep but history indicates that the gain will likely be less than you anticipate when all of the costs are considered such as broker commission and house maintenance.
Building equity will allow you to have something to carry with you in future years. Each month decreases the amount of your mortgage and eventually it will be paid off. This equity is paramount as you age and will give you the ability to retire with an asset.
There are certain tax benefits in owning your home. The mortgage interest and property taxes reduces your annual tax liability. In addition, in many instances you won’t get taxed on the selling of your home depending on how long you lived their and your age.
The emotional aspects of owning your home can not be ignored. Many families have roots and memories that are clearly associated with the home that they grew up with, which make the ownership all the more special. The school system will also be a major consideration if you have children.
So when the time is right for you to make the decision on home ownership, know that this decision is the right one and the right time for your individual needs.
Home is where the heart is!
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