2. Consider Your Appetite for Commitment
The main advantage of renting is the lack of commitment. You can try a place out for a year or two and if you don’t like the space or the neighborhood, you can relocate without having to worry about hiring a real estate agent to find a buyer. Plus, if something in the apartment or condominium is broken, the landlord or the property manager usually has to deal with it instead of you.
But there are a lot of benefits to being a homeowner that are inaccessible to renters. Perhaps the greatest benefit of homeownership is that your monthly mortgage payment is an investment as opposed to an expense. As you pay down your mortgage, your equity in your home increases, growing one of the most stable assets on your personal balance sheet.
Beyond the investment opportunity inherent in homeownership, other benefits include:
- Maintaining ultimate control over your home’s look and feel
- Enjoying an enhanced quality of life as you grow roots in your community
- Providing educational continuity for your children
- The ability to deduct your mortgage interest and property taxes
3. Understand Which Financing Options Best Fit With Your Long-term Goals
Looking at your mortgage payments through the lens of investing as opposed to a sunk cost, as you likely did while renting, can be instrumental in helping you decide whether or not owning a home right now is the correct decision for you. As you make this evaluation, it’s also important to consider which financing option best fits your long-term goals.
Some features of mortgage products that may be useful to first time homebuyers include:
- Low and no down payments options
- Reduced cash out of pocket
- Relaxed credit-score requirements
- Consideration for student-loan debt
There are also different types of mortgages, allowing you to decide to either make a fixed monthly payment or keep payments low initially with an adjustable-rate mortgage. Another factor you’ll want to consider is the amount owed on your other debts, like credit cards and car loans. If you’re struggling to make any financial obligations on your current budget then it may be a good idea to hold off on buying a home until your financial situation is more stable.
Whatever your circumstances, homeownership doesn’t have to be a pipe dream. With careful planning and budgeting, you can say goodbye to rent payments and begin building equity in your home.