Should You Buy?

Now that you've planned and saved, consider the financial and lifestyle changes involved in homeownership. Make sure you’ve considered the following factors before deciding if buying a home is right for you. 

Advantages of owning a home:

• You can control your environment.  When you buy a home, you select the property that’s right for you based on location, size, and appearance. You can also remodel your home any way you like.  (Subject to city zoning, homeowners association, and other restrictions.)

• You can deduct the interest on your home loan from your income taxes.  (Consult your tax advisor.)

• You can build equity in your home, the proceeds of which you obtain when you sell. 

• You can achieve a favorable return on your investment in an appreciating housing market.

• You can borrow against the equity in your home.

• You can enjoy the satisfaction of achieving homeownership.

Considerations:

There are costs in addition to your monthly principal and interest payment. Be prepared  for the additional ongoing expenses associated with owning a home. These are in addition to the payment of the one time closing costs.

• Additional utilities.  You’ll probably have to pay for more utilities and services compared to renting such as water, gas, trash pick-up, sewer and electricity.  These expenses depend on the type of property and location.

• Maintenance costs.  You will be responsible for all repairs.  When renting, your landlord usually takes care of all maintenance costs.  As a homeowner you will be responsible for all expenses.

• Insurance.  It is required to carry homeowner’s insurance to protect your home and personal property in the event of a fire, theft, or natural disaster.  Policies and coverage vary depending on property type and location.

• Property taxes.  Don’t forget about city, county and municipality taxes. In most states you will be required to pay property taxes based on the property location.

• Homeowner association fees.  If the property is a condominium or is a home located in a planned unit development, you will probably have to pay homeowners’ association fees.  These fees typically cover maintenance costs for common areas and group insurance fees.

• Buying a home does not guarantee an increasing home value. You should always pay attention to market fluctuations in value which can influence your equity and resale potential.

After making such a major investment, many people find that their lifestyles change.  In addition to the added financial responsibility, you may find yourself spending more time at home to work on improvements or just to enjoy your investment.  This means less time and money may be available for discretionary expenses such as travel, luxury items and hobbies.