The Advantages Of Home Ownership:
- It’s your place. You can decorate the way you want.
- Homes typically increase in value and build equity. Owning a home is one of the best ways to build long term wealth.
- Your costs are more stable then renting. Rent costs typically increase a minimum of 3% per year.
- Interest and property taxes are tax deductible. Owning a home does offer many tax advantages that can save you money.
The Disadvantages Of Home Ownership:
- You are responsible for maintenance of your home. This can be as simple as a toilet repair or as complex and expensive as a roof or furnace replacement.
- Owning a home is a long term financial commitment.
- Owning ties you to a location, it makes it hard to just pick up and move.
Let The Math Do The Talking
In most situations if you plan to stay in the area it is better to buy instead of rent. If you need to figure out
whether buying is best in your situation this rent vs buy calculator will help you decide.
You have learned what it takes to buy a home, now it is time to get ready to do so. Before doing anything else you must get your finances in order:
- Pay down your debt.
• Pay off your credit cards, car loans etc. Your total debt should be no more than 38% of your income.
• Once you pay off credit cards make a habit of paying them in full every month. Do not carry a balance on your cards.
- Get your down payment together.
• Start saving.
• Ask for a gift (talk to that rich uncle).
• Pay yourself first. Deposit a predetermined percentage in your savings account, then live off the rest of your paycheck.
- Clean up your credit.
• You generally need a credit score of 650 to get a mortgage. The higher your credit score the lower your interest rate will be. The lower your interest rate the lower your monthly mortgage payment
• Repair bad credit, talk to your mortgage loan officer about how to do this.
• Establish credit if you don’t have any. Talk to your mortgage loan officer for tips on how to establish credit.