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Thinking about buying a home?

Courtesy of USAA 

Buying a home is one of the largest financial decisions you will make in your lifetime, and it shouldn't be spontaneous. It's wise to consider the costs, the benefits and your lifestyle before you take the first steps to becoming a homeowner.

Costs

There are costs associated with getting the deal done before you even move into your new home. Generally, it is a good idea to have a cash down payment of at least 5%, although 100% financing is available in some cases.

There are costs involved in completing the deal, such as appraisal fees, home inspection fees, realtor fees and lawyer fees. The number of closing costs you pay depends on the state where you buy a home, and can add up very quickly.

Once you've become a homeowner, you'll have many new expenses — utilities, pest control, homeowners insurance, property taxes, maintenance and other obligatory fees — that you never had to worry about with renting.

Ensure you are in a good financial space before proceeding with home ownership. To properly assess your readiness, obtain your credit report. If you have too much debt, consider delaying your home purchase or consult a financial advisor for assistance.

Benefits

Not only does home ownership give you a sense of pride and stability, it also provides newfound freedom and privacy. Knowing you are not restricted when it comes to things like decor, pets or noise is a new luxury you may enjoy.

Buying a home and obtaining a mortgage also allows you to build equity, making your home a financial investment. Unlike renting, a fixed mortgage payment will never increase unexpectedly.

As well, the interest on your mortgage and property taxes may be tax deductible, which means that owning a home can help reduce your overall tax load. Since you generally pay more towards interest in the first years of your mortgage, this becomes a significant savings benefit.

Your Lifestyle

It is important to consider your current and future lifestyle when buying a home. If you don't have a steady job or think you may relocate in the next few years, renting may be a more feasible option for you right now.

On the other hand, if you're ready to settle down or start a family, it may be the right time to buy a home. Even if your situation changes and you decide to move after a few years, the purchase you've made could prove to be a good financial step toward the future.

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MilitaryAvenue.com Resources: Buying a Home 

 

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Posted 3/22/2010

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