Real Estate Appraisal Blog

There are both advantages and disadvantages to owning a home when you consider the economy. The best way to determine whether you should rent or buy is to consider the pros and cons of both positions, then see how they relate to your current home situation. 

Although it may seem preferable to buy a home because of the security that it offers, there are costs associated with home ownership that may not be ideal for you at this time. You must consider all aspects of both renting and buying before you arrive at a decision, and know that these pros and cons may change over time as well.

Here are some considerations to make when deciding to buy or rent:

1. Owning a home isn't always a good investment. Avoid buying a home as an investment vehicle to turn a quick profit. While some real estate investors make a lot of money, many do not, particularly in a down economy. It's generally better to buy a home if you want to stay in it for a while.

• Buy a home as part of your family's plans for settling into a place of your own.

2. Homeownership requires a down payment. A substantial down payment is typically required for most borrowers looking to secure a mortgage loan. If squirreling this much money away is difficult, you may be better off keeping an emergency fund or investing the money, rather than buying a home.

3. Mortgages include interest payments. Although mortgage interest is deductible in some situations, this is not always the case. If your interest payments, along with your other deductions, aren't higher than the standard deduction on your tax return, there's no tax benefit to paying mortgage interest. 

4. Homeowners are responsible for repairs. As a homeowner, you must make repairs yourself or turn to a professional serviceman. There's no landlord to contact for repairs. You'll also be responsible for the day-to-day upkeep and maintenance costs as well.

5. Homeowners have additional insurance requirements. While you're making payments on your mortgage, you must pay for homeowner's insurance. Even if you've already paid for your home, you should still obtain this valuable insurance to protect your most important asset.

• Renter's insurance is less expensive than homeowner's insurance.

6. Renting doesn't earn equity. By paying rent monthly, you're not building up any worth in the property, but the owner of the property is. Renting has no investment value at all, unless you're saving money by renting that you can invest in other investment vehicles like IRAs and mutual funds.

7. Homeownership does offer benefits. Home ownership provides your family with a sense of community, pride, and family security. You can design, decorate, and improve upon your home however you like without worrying about landlords, lease agreements and the potential for lease termination.

8. Renters can save money. As a renter, you don't have to pay homeowner's association fees, property taxes, homeowner's insurance fees, and maintenance charges. Renters can save significant money in comparison to buying, which can be put toward other investments and purposes like keeping an emergency fund.

There are definitely benefits and drawbacks to both of these positions, renting or buying. It's important to weigh all of these pros and cons before making a decision. Your best housing solution depends on your individual family and financial situation.

Choosing wisely based on your own needs will enable you to live more comfortably, secure in the knowledge that you're doing what's best for you and your family.

 

 


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Posted in:Buying First Home and tagged: #appraiserscleveland #clevelandohiopropertyapprais
Posted by Gregg F. Micale on February 21st, 2022 8:13 AMLeave a Comment

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9 Steps to Take Before Buying Your First Home

Are you planning the purchase of your first home? Buying a house is a major decision because the house will soon become one of your main financial assets. Plus, you’ll be making mortgage payments for at least ten years.

Take these steps before you buy:

  1. Ask yourself if you’re financially stable. Have you had your job for at least five years? Do you have a reliable income?
  2. Are you ready to make monthly mortgage payments for at least ten years? Are there any other major expenses in the near future that would make keeping up with your mortgage payments difficult?
  3. Do you plan to stay in this house for at least five years? The first five years of mortgage payments usually only cover fees and interest. Are you ready to settle down in one spot?
  4. Raise your credit score. You can qualify for a mortgage with a credit score of 580, but you’ll have to spend more on fees, interest, and your down payment. You’ll get a much better deal if you wait until you have a credit score of 700 or above.
  5. Look at your debt to income ratio. This is a good way to tell if you’re earning enough to afford a home. Ideally, the expenses linked to buying a home shouldn’t exceed a third of your income. Add up your mortgage payments, utilities, property taxes, and expected repairs.
  6. Save money for your down payment. You can buy a home with a down payment of anywhere between 3% and 20% of the value of the home. The more you can afford to pay, the lower your mortgage payment will be. Look into getting an FHA loan to help with the down payment.
  7. Plan for expenses for maintaining your home. You should count on spending at least 3% of the value of the home on maintenance each year. Create a saving fund to cover these costs.
  8. Document your income and assets. Start gathering all the documents you’re going to need while you compare mortgage options.
  9. Look for the right house for you. It’s best to wait until you can afford something better if you don’t find anything you like. Take the neighborhood and its development into consideration when buying a house, since these aspects will influence the future value of the house.

Buying a house is a very important decision. Becoming a homeowner means that you’re taking a big step on the path of financial stability, and you’ll want to be prepared for this step. Your home will likely become your main asset as it appreciates in value and you build up further equity in it by paying down your mortgage.

Buying a home requires careful planning. Ask yourself how much you can afford to borrow, what kind of mortgage would be best, and what kind of home would be adapted to the unique needs of your family. Take the time to go over your income, boost your credit score, and make a list of what to look for in your ideal home before you start your search.

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Posted in:Buying First Home and tagged: #appraiserscleveland #clevelandohiopropertyapprais
Posted by Gregg F. Micale on July 25th, 2021 10:04 AMLeave a Comment

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