Should You Own Your Home?

The American Dream Of Homeownership Isn't Right For Everybody... Or Is It?

Weighing the pluses and minuses of homeownership...

Buying a home can be one of life's most exciting and yet most challenging experiences you can go through.  However the question remains, "Should you own your own home or rent?"

There are many benefits to owning a home but there are also just as many tradeoffs. To help you decide if owning a home is right for you we've listed the pros and cons of buying versus renting.

Equity

One of the most common complaints among renters is the discouraging feeling that you are simply throwing your money down the drain. This is typically true for the homeowner who rents for a long time. However, building equity isn't an automatic universal truth. In some cases, the property values are too high to start with so the re-sell just won't net you a profit and in other cases the property values don't increase at all. We think that in this current market you can get some amazing deals but we also think that unless you are thinking of living in the same house for 5 years, you should probabl rent. We don't think that property values are going to go up in the next couple of years at least.

There are some exceptions to this case. For instance if you are good at fixing things around the home, you can buy a house that needs some work and you can usually buy these homes for much less than it would cost you to fix them up because most people can't or don't want to do this. Building sweat equity is a great way to build wealth and if you are up for this, we'd love to help you.

  • Buying: You build your equity with every payment made. For the first half of the mortgage, most of each payment pays off interest. However every month some part does go towards your principle. Your equity will fluctuate as the market value of your home changes. Over time though, history has shown us that building equity in a home is a smart investment.
  • Renting: You pay for a place to live, period. While you have a lease for a certain time period, you are not investing in the home. The plus side is you have no responsibility for ongoing repairs or for loss of equity if the market goes down. However you are investing for the landlord. You are essentially making the landlord's payment and building their equity.

Monthly Payments

In many cases, and depending on the home that you plan to purchase, your monthly payments will likely be comparable to your current rent or quite possibly lower. Many first time buyers purchase a "starter home." This may be a smaller or an older home that can be purchased at an affordable cost. As mentioned above, you can begin to build equity in this home and you can then upgrade to a more expensive home in a few years.

  • Buying: Costs can fluctuate somewhat on a yearly basis as real estate taxes and value of the property changes, but right now this has been on a downward direction which is great. We recommend that you choose a fixed rate loan when you buy so that you can accurately bank on a relatively fixed payment. The payment will adjust as the value of the home adjusts and as the insurance and real estate taxes adjust.
  • Renting: Costs are fixed at least for the term of the lease (generally 1 year) but usually increase after the lease expires.

Upfront Costs

Upfront costs are possibly the most misunderstood aspect to the home purchase and the one that keeps most renters from even researching purchase. The perception that you must have huge down payments to purchase a home is no longer accurate in most cases today.

  • Buying: Typically requires a larger investment than renting initially. However there are many programs that require very little for down payment.
  • Renting: Usually does not require as much up front as buying but still requires fees such as deposit, pet deposit, 1st months rent and possibly more.

Tax advantages

Tax advantages are one of the most advantageous aspects to homeownership.

  • Buying: There are significant tax advantages to homeownership. Interest that you pay on your mortgage and property taxes are all deductible. These deductions can make a huge impact on your federal and state tax returns. And of course right now there are tax credits for both new buyers and buyers who are moving up and who have lived in their current home for at least 5 years.
  • Renting: Renting offers no tax advantages. Only your landlord will reap tax benefits that are available.

Other Considerations

Maintenance

  • Buying: Any maintenance must be done and paid for by you. Home maintenance costs average about 1% of your home's value per year.
  • Renting: You typically are responsible for very little maintenance costs when you rent.

Time to Move

  • Buying: If and when you want to move, you will have to sell your home first.
  • Renting: Your only concern is fulfilling your lease.

A Place to Call "Home"

  • Buying: You have the right to remodel and redecorate at your discretion. You own it; you can do with it what you wish.
  • Renting: You have very little flexibility besides decorating the home. Carpet, wallpaper, paint, etc are all items that the landlord will change at his discretion with little to no input from you.

Research

If you think it is time to at least research the possibility of buying a house you can click on "CIncinnati Homes for Sale" and research all the homes for sale in the entire Cincinnati are through the Multiple Listing System.

If you want to research the possible value of homes in various zip codes, click on "Cincy Market Snapshot". Here you will see all the houses on a map of the zip code. When you click on the houses you can see all the details and all the photos. What is even better about this, apart from the fact that it is free, is that you can also see the homes that have recently sold. This is the only place that you can find the information about the actual sales value with all the information and photos. This is priceless when it comes to making an offer on a house. It helps you feel in control, you will know the value of the homes you look at, you'll know for sure if you are getting a good deal!


We sincerely hope this report will be of value to you in making one of the biggest decisions of your life. If we may be of any further service or if you would like a free consultation, please:

Call The Meadows Team,

Keller Williams Advisors 513 766 3888

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