The Benefits of Homebuying
Preparing Your FinancesThe first – and most important – step in your buying vs. renting decision process should be reviewing your overall financial picture. Mortgage lenders want to see that you are financially stable enough to pay for your home, taking into consideration your credit, income and assets. Understanding your entire financial situation before starting the homebuying process is crucial to having financial peace of mind in your decision. Our biggest tip when considering homebuying is to ensure you have three to six months of expenses saved in an emergency fund. This will give you a nice cushion to face the unexpected expenses that come with owning a home. Beyond that, we suggest waiting to purchase until you have a 3% to 5% down payment saved, plus extra on hand for closing costs and upfront taxes and insurance. Although there are loan programs available that require as little as 0% down, the more you can put toward the overall price of the home will save you money on interest and insurance over time.
It's also important to think about the extra costs that come with homeownership, and if you are ready for that responsibility. Consider these factors:
- Property Taxes
- Homeowner’s Insurance
- HOA Fees
- Maintenance and Renovations
- Lawn Care
- Pest Control
If you believe you’re ready to take on these tasks – and you have enough built up in your savings to cover emergency expenses and a down payment – now may be the time to purchase a home.
Consider the Value of HomeownershipAs we stated earlier, we consider the value of homeownership priceless. There are three very important benefits to owning your own space that will help you on your path to peace of mind:
When you purchase a home, it’s yours. You are free to do as you please in your home without having to worry about those pesky landlords breathing down your neck. Don’t like the kitchen cabinets? Paint them.
Don’t like the flooring in the basement? Replace it. As we shared earlier, the responsibility is yours. Enjoy – but ensure you’re up for the task.
Long-Term Financial Stability
When you take out a mortgage on your home, every payment you make towards that mortgage builds equity that you own. You can then use your home’s equity towards renovations and home improvement projects, or a variety of other things, such as debt consolidation, paying for major life events such as weddings and adoptions, planning a vacation, or covering medical expenses. It could also go towards the purchase of your next home! Learn more about our Home Equity Line of Credit in this blog post.
Long-Term Housing Stability
In owning a home, you don’t have to worry about a landlord deciding to raise rent – although mortgage payments can fluctuate based on taxes, adjustable interest rate, and insurance – or kicking you out for whatever reason they can come up with. As long as you can keep up with your mortgage payments, you will own that home for your entire life – or until you decide to sell. Visit our webpage dedicated to sharing tips to staying on track with your mortgage and avoiding foreclosure. If you are worried about being able to make your mortgage payments every month, it might be worth renting for a while longer to continue on your path to financial stability.
While owning your own home does have its benefits, it may not be the right choice for everyone – and that is OK. Renting is a great option for those who are working to build their credit score and savings, move frequently due to work, experience variable income, or need to save up for another large purchase first.
No matter what path you’re on, CommunityAmerica is here to help. Our Rent vs. Buy Calculator compares the costs to see which makes the most sense for your decision, and our recent podcasts cover the Basics of Homebuying and What to Expect through the Mortgage Process. If you feel as though you’re ready to start the process, or maybe you want to speak with a professional before deciding, schedule a meeting with a CommunityAmerica Mortgage Advisor or visit your nearest branch today.