Making the Move from Renting to Buying
Welcome to the real world. Are you ready to be homeowners? It is a big step to go from renting to owning. There are a lot more responsibilities but you are gaining equity for the future, saving money for yourself and developing a standard for which your family can carry on your legacy. Homeownership is such an American dream and when you own the keys to your own home, the sense of satisfaction and self-worth is really overwhelming.
If you currently making the jump from renting to owning here are some top things we want you to know, understand and be prepared for.
Everything is your responsibility.
If you’re planning on buying a townhouse or condominium, this may not be true. A townhouse or buying a home in a condominium complex is a great way to ease into home ownership. You will be responsible for the inside part of your unit while the homeowners association will be responsible for the exterior. However, the drawback is that you will be paying for that exterior responsibility. These costs are in the form of homeowner association dues and they may be collected monthly or annually and could run anywhere from $100 a month to several hundred dollars each year. Because of this, your homeowner’s association will take care of any repairs or replacements of the roof, siding or landscaping as well as any amenities that the complex provides. This is a great way to begin homeownership as you can build up equity in a condominium and then rolled out into a single-family house later on. – Related: Why Pre-Approval Makes You a Quality Home Buyer
Once you have your own single-family house all responsibilities fall on you. If the roof leaks, an appliance goes bad, something needs to be painted or repaired it is all up to you. Of course, you can hire someone to do all of these repairs or replacements but it all costs money. You need to be prepared for this by saving up ahead of time. This will destress the situation and keep you ahead of the game.
You are building money for yourself, not paying someone else’s mortgage.
This is one of the biggest benefits homeownership. You are not paying another person’s mortgage by your rental payments; you are paying yourself. Every mortgage payment you make is a drop in the bucket towards the equity on the home. If you own the home for 10 years and you’ve been paying a good amount of principle, by the time the home sells not only will it have increased in value but you’ve paid down on the initial mortgage term. You may have a lot of extra money to either cash-out or roll into a larger home with a higher mortgage payment.
You get tax benefits.
Your mortgage insurance, interest, and any taxes may be tax-deductible. There are standard deductibles but if you go over that standard than you can take that money off of your income taxed. This is a great benefit to those attacks time and could save you hundreds if not thousands of dollars each year depending on how much interest you are paying.
Going from renting to buying can be scary but it’s a great move. If you’re planning on staying in a home for longer than five years then buying is a great option. If you’re bouncing around from job to job or place to place renting might be a better option at this time. You certainly don’t want to lose money when it comes time to buy and resell a home so unless you’re going to build up some equity and have a profit when the home sells, it may be best to stay renting for a while.