The Benefits of Buying a Home
To buy or rent, that seems to be one of the most highly debated topics within families and requires careful deliberation. It’s important not to think short term and to think long term. Yes, a mortgage can seem intimidating and with renting you have the flexibility factor which can be great, but there are many benefits to buying a home – and here’s the top reasons why.
1. Rents are rising and mortgage rates near historic lows, which makes buying a home more affordable.
2. You can customize your space.
3. You are “forced to save” – since homeowners have to pay their mortgage every month, they are routinely putting money away
4. Fixed mortgage rates won’t go up, even if the cost of everything else does.
5. The chief tax benefit of homeownership is the ability to deduct mortgage interest payments.
6. You can take advantage of the current low interest rates and prices.
7. Once your home, it’s completely yours. You eliminate the expense of housing once you’ve paid it off.
8. If the home appreciates more than you’ve paid in mortgage, interest, taxes, and maintenance over time, you’ve earned a return
10. Homeowners usually tend to stay in their homes for longer than renters, so they’re more likely to put down roots in their communities.
11. By consistently making your monthly loan payments on time, you will demonstrate to lenders that you are a reliable borrower and that they reduce the risk of defaulting on a low loan.
12. Eliminate monthly rent, pet rent, renter’s insurance and additional utility bills.
Determining what house you can afford
If you have decided that buying a home is right for you, now you must determine what you can afford and what type of mortgage you can get approved for. Start by strengthening your credit score, saving for the down payment and building a healthy savings account. Next, consider your debt to income ratio. To calculate it, add up your total monthly gross income. Once you have that figure, multiply it by 43%. This number is the maximum amount of monthly debt payments you should have, including your mortgage.
In addition to understanding what type of loan to look for, you know need to consider your down payment. Many mortgages are available that will allow you provide a down payment of less than 20% sometimes even 0% of the price of the home. Most importantly, buy a property that you can afford now, not later. Even if you’re certain that you’ll be earning more in the next few years, you might also find that circumstances increase the other expenses in your life like children, school, new cars and travel plans. Ensure that there will be room in your budget for you to live the life you want.
Keep in mind, searching for a home can take longer than you think and operate on your timeline.