Many people see owning a home as a right of passage, and sometimes as an obligatory part of their life without considering the risks and benefits. This is because it is seen as part of the American Dream. However, buying a home comes with a lot of responsibility and considerations to make, along with some great rewards. If you are considering buying a home, whether it’s your first home or you’ve been on the market for a while, it’s a good idea for you to be aware of the benefits and risks of the investment you are about to make.
To help you on your way to deciding if owning your own home is right for you, the Loan Brothers from Mares Mortgage have put together some of the fantastic reasons why people choose to own instead of rent:
Related: How to rent out your house and buy another
It’s a Good Investment
Over the short term, you can expect house prices to move in cycles if you stay in your home long-term. You could see an increase in the overall value, which in turn will give you a substantial return on your investment. If you are renting your home, whether it’s a house, apartment, etc. the money that you are spending each month is a bill-paying towards a landlord’s investment, rather than an investment of your own.
Although there are apparent benefits to renting, such as not having the responsibility of maintenance or commitment, one has to consider that there are resources available to us that will help improve the investment over time. You can’t expect your home to increase quickly in value over a short period; however, buying your own home is one of the best long-term investments that you can make.
Rent vs. Own
Many people get confused as to whether renting or buying is better. There is no right answer, but you should always bear in mind that owning your own home is an investment rather than just a living cost.
When buying and renting, you have to take into consideration, like the initial costs, recurring costs, opportunity costs, and net proceeds. With renting, your landlord is responsible for things like essential maintenance, whereas owning means you have this responsibility yourself. That being said, when you own your own home, you have more freedom to make your house a dream home with the use of decorating, renovations, and additions.
You Build Equity
If you subtract the amount you have left owed on your home mortgage, such as those you would find at Mares Mortgages from the total value of your home, the remaining amount is your equity. This is what actually belongs to you. There are two ways that you can build your equity:
With each mortgage payment you make, your equity will increase as the amount you owe on your loan decreases; this means merely paying your mortgage is like saving each month. If you add value to your home, your equity also increases. If you pay your mortgage and add value, you are increasing the value of your equity, which means you can tap into this in the future if you ever need the money, through the use of an equity loan.
Are you ready to buy your dream home? Contact the Loan Brothers today
Reduce Your Loan
With each monthly payment, you are reducing your overall loan amount. Not only does this mean you are paying into a decent savings pot each month and helping build a solid credit history, but you are putting your money towards something that you own rather than just paying a bill like renting.
There are many options when looking for mortgages; the Loan Brothers from Mares Mortgages can help you look at the best options. Over time, it may be possible to reduce your payments as your loan reduces; this is often a reason people choose to remortgage and find a better deal.
Increase in Value
One of the biggest advantages of owning your own home is the potential to add value. If you can add value to your home, then you are ultimately increasing the return on your investment. If the markets are doing well then you will usually see an appreciation and gain a small increase in the value without having to do much other than maintain the property, however, if you can keep the home up to date, modern, in good condition, and improve on it, then you stand to increase both the value and your investment.
You, Will, Have Significant Tax Reductions
If you own your own property, you can reduce the amount that you pay in income taxes each year. The property tax and mortgage interest payments might be deductible from your federal taxes, as well as some state taxes. You may also find that there are certain loan discount points and closing costs that you can deduct as well.
When the interest is the majority of your monthly payment at the beginning of your mortgage, these tax deductions can help you put a chunk of funds back in your pocket. When buying your own home, this is definitely something that you should be utilizing and have it at the top of your list to-do.
You Build a Strong Credit History
If you’ve bought a house before or are looking to buy your first, you have probably already taken your credit score into careful consideration. After all, your credit score will affect the amount you can borrow and the interest rate that you will be accepted for. The better the credit rating, the better the rate. But did you know that regularly paying your mortgage payments on time can also help to improve your credit score and keep it looking good? We will allow you to run your credit for free for finding this article in our blog: http://dstoev.2create.studio/projects/blake_driver/mares-mortgage/wordpress/credit-authorization.
Owning your own home and making payments on time is one of the best ways you can prove to other lenders that you are a good borrower and can be trusted. Having a strong credit history will help in the future, especially when you need other loans for things like buying a car, home improvements, or paying other major expenses.
You’re Free to Create the Home You Want
Another top benefit of owning your own home is the fact that you have the power to make it exactly what you want it to be. If you’re a renter, then you will understand the limitations that you face when it comes to home improvements, even down to simple choices like the colors you can put on the walls.
Being a homeowner gives you tremendous freedom to create the home environment that you have dreamt of. You can complete your family with a pet, paint the rooms whatever color you like, change all the flooring, and extend your home all without having to get the approval of a landlord.
Owning your own home certainly gives you plenty of freedom. One significant advantage and change that you can make to a house that you own is to add-on to your existing space. If your family has grown, you need to care for an older relative or just want to create a larger, more open living space, you can extend your home as you like, within planning permissions.
If you rent your home, you have none of this freedom, which means you are often uplifting and moving more often than you should. When you own your house, the power to be able to add to your home means that you can settle and lay down roots for yourself and your family.
Have a grand plan and a vision in your mind for how you would like your perfect home to look? Then owning your home gives you this opportunity. When you buy your house, you can renovate it as you would like. If you want to rip the entire downstairs out and start from scratch, go for it, the world is your oyster when you own your home. If you’re someone who likes the idea of a renovation project, you could always go for a property that needs a little care and attention and starts from the bottom up. This is a fantastic way of securing a significant return on your investment as the value tends to jump in these sorts of projects. In fact, many people make a living from doing just that.
Paint and Decor
Again, when it comes to painting and decorating, you can do whatever you like inside a house that you own. Whether it’s a massive feature wall, bold colors, or elaborate flooring, you have the control to decorate however you want, meaning you can create a home environment to match your personality and taste down to a tea. This is something that renters struggle with as they have to request the permission of their landlord to make any changes like this. You can come across landlords that are relatively easy-going, but there are always going to be restrictions.
Related: A Guide for Avoiding First-Time Home Buyer Mistakes
Just like the inside of your home, the outside can be changed to suit your wants and needs exactly. When renting, you often only have the permission to maintain your gardens and can’t create the outside space that you desire. When you own your own home, you can do careful landscaping to create a relaxing outdoor living space to extend your indoor space. Whether you want to add a pool, create a child-friendly playground, or build yourself a fire pit, you can let your mind run wild and create the perfect outside space of your dreams.
The Loan Brothers can help you find the perfect loan to finance your dream home
Are There Any Disadvantages To Owning a Home?
For some, buying a home is a lifelong goal that comes with the excitement of stepping into a new chapter. But with the new responsibility come financial pressures that you need to make sure you can withstand.
Although the many advantages of buying a home are outlined above, it’s essential to look at some disadvantages. It will help establish a clearer outlook to see if you’re ready to own a home. Let’s take a look at some of the drawbacks below.
Maintenance Can Be Costly
One of the most pressing financial issues for homeowners is home maintenance. Owning a home means that you’ll need to dish out money for repairs without a moment’s notice.
Depending on the nature of the issue, some repairs can cost upwards of $1000. Do you have the extra money saved up to pay for repairs when necessary? If not, you may want to look at opening an additional savings account, so repairs don’t come out of your emergency fund.
Lack of Flexibility
When you buy a home, the property officially belongs to you once the sale goes through. That means you’re planning on staying in a specific location for an indefinite amount of time.
Make sure that you consider this before buying a house. Unlike renting, you won’t have the option to pick up and move when you want to or when the lease is up.
If you want to move from an area, you’ll need to sell your house and find a new location to live in that fits within your budget. Also, with moving costs, the process could be a lot more expensive this time around. So if location flexibility is important to you, then buying a house may not be the right choice.
Hidden Costs of Owning a Home
We often boast how much of an advantage it is to own your own home; however, you do need to bear in mind that there can be hidden costs. These are mainly down to the fact that you are solely responsible for maintaining and upkeeping your home. If you need a new boiler or the electricity needs to be replaced, then that could jack up the repair bill. It’s best to make sure you have home insurance and a contingency fund just in case the hidden costs creep in.
High Upfront Costs
There are many advantages to buying your own home, but you need to keep your eye open for the upfront costs that you will have to pay. These tend to be a lot higher than if you were to rent, which is why so many people get stuck in the renting market and find it hard to get onto the property ladder. Unless you are lucky enough to be gifted a downpayment for your house, you are likely going to need to save to be able to afford it. It’s best to speak with a mortgage company like Loan Brothers from Mares Mortgage, who will be able to advise you on any upfront costs needed.
Ok, so we’ve spoken about how you can gain an appreciation and add value to your home, but you still need to be aware that there is every chance that you may experience depreciation as well. Housing markets can, at times, be unpredictable; therefore, you need to expect the value of your home to drop just as much as you can expect the value to rise. Sometimes it’s just how the markets go, and it can depend on when you are selling or if you are selling.
When looking at buying your own home, you need to make sure you are fully aware of the financial commitment that comes with it. A mortgage is most likely going to be the largest and longest financial commitment that you make in your entire lifetime. This means you need to be in the right frame of mind and plan for the future. You might not be able to plan for every event, such as market crashes or losing a well-paid job, but you need to make sure that the mortgage commitment you make is a realistic one.
Should You Own a Home?
So, should you own a home? Have a look at some of the questions below; if you answer yes to most of them, then it might be time to start looking for your ideal house.
- Do you want more freedom than you get from renting?
- Are you looking for security?
- Are you in a secure job?
- Do you want a long-term investment with the potential of equity?
- Do you have a downpayment, or started thinking about saving?
- Do you want the opportunity to build your dream home?
- Are you ready for the financial commitment and understand the commitment needed?
- Do you have a good credit rating or want to build your credit rating?
Contact A Mortgage Lender
If you have answered yes to the above questions and this post has got your mind running with the thoughts of buying a house and turning it into your dream home, then it’s time to start thinking about getting some mortgage advice from a mortgage lender. The Loan Brothers are here to help, answer any questions, and get you on your way to securing your place on the property market.
Related: Signs You’re Ready to Buy Your First House