Advantages of Buying a Home

If you have considered purchasing a home, you have probably asked yourself the question, "Is this a good time for me to buy a home?"  As a home buyer, you must consider a variety of economic, social and financial issues in order to answer that question.  Though there really isn't a right or wrong answer to that question, you must weigh each option carefully and examine the impact of your decision.

Common Reasons to Purchase a Home:

A place of your own: "Your home is your castle," as the old saying goes. A home is a place you can call your own. You have the liberty to design and decorate your place to your tastes.

Financial incentives: For many people, the motivation for home ownership is primarily financial. Owning your own home is a first-rate investment for a number of reasons.

Scheduled savings: When you buy a house, your monthly mortgage payments serves as a type of scheduled savings plan. Over time you gradually accumulate what we call "equity," an ownership interest in the property that you can often borrow against or convert into cash by selling the house. In contrast, renters must continue paying rent to a landlord for as long as they rent, without the opportunity to build up equity.

Stable housing costs: Another advantage of home ownership is that while rents typically increase year after year, the principal and interest portion of most mortgage payments remains unchanged throughout the entire repayment period (typically 30 years). In fact, because of the effect of inflation, this means that over the years you pay the same amount but with ever "cheaper" dollars.

Increased value: Houses typically increase in value, or "appreciate," over time. It is not unusual to find a house that sold for $50,000 fifteen years ago to be valued at much more than that amount today. This increased value is as good as money in the bank to the homeowner.

Tax benefits: Homeowners also get significant tax breaks that are not available to renters. Most important, interest paid on a home mortgage is usually deductible. This alone can save you a substantial amount each year in federal income taxes. 

More Room:  Often times the motivation to upgrade from an apartment to a house lies in a lack of space.  You may have a child on the way and need an extra bedroom or want a larger backyard for Fido (or in my case, my wife didn't have enough closet space).  If you currently live in a home and your only motivation is for more space, you should consider the costs of adding on before considering a purchase.

Better Schools, Neighborhood:  If you have a family or plan to have one within the next few years, this may be a top priority.  Schools, shopping, etc. become an integral facet of everyday life.  Choosing the right neighborhood or school is generally the first criteria to finding the right home.  

New Home:  The thought of living in a home that no one else has ever lived in is very tempting for many home buyers.  In addition, new homes generally have a higher appreciation rate than older homes in more stable neighborhoods and the time frame to recoup and costs is considerably shorter.