Ah, the age-old question: is it a good idea to buy a home. Well, if you want the short answer— yes, yes it is, assuming that you are ready to buy it. You don’t want to commit to a house when you aren’t sure how long you will live in the area or when your paycheck isn’t projected to be stable for the next few years. Why do you ask? Well, to answer that, we will need to discuss the long answer.
When to Consider Buying a Home
Like it was mentioned before, whether to buy a house or not, at any particular time, is a factor of time and money— much like every other aspect of our society. So that is what you need to make sure you have: the right timing and money.
Let’s start with time. When we say time, we don’t mean a gross block of time, weeks on end, devoted to searching for a house (even though it might feel like that sometimes). What we mean is the right timing. You want to find yourself in a position where you will be staying in a certain area for longer than a few months. Now, determining what length of time constitutes, as stable, is up for interpretation, but it would probably be best if it were longer than a year.
Obviously, not everything is certain, in fact, it hardly ever is. But if you are in a position where you are away at school, on a temporary assignment, or anything else short term like that, you might want to reconsider buying a home.
When it comes to money, like with time, we don’t mean a large chunk of money at one time. Aside from your down payment, which can be of any amount really, you don’t necessarily need a large sum of money at any given time, just consistent money over a long period. So, if you don’t have a steady job, or you are planning on leaving your job for another anytime soon, you may want to wait until you are well established in your financial situation. This will give you time to figure out if your monthly bills and paycheck will allow you to handle a house payment. (This can also help you get a loan easier, in some instances as the bank can see that you have a steady income).
Usually, a loan officer with either a bank or a title company will go over the specifics with you, and they can start making a plan for you to get to a more stable position. Meet with a loan officer as soon as you can after you have decided to buy a home—they’ll get you on track.
If you know that you won’t be ready to buy a home anytime in the near future, start talking to the loan officer anyway. They can pull your credit, give you a strategy for your finances, and many other things that will make the buying experience easier.
Benefits of Buying a Home
Now, on to the fun stuff: the benefits of buying a home. Many people wonder why they should buy a home or, as we’ve already established, it is a good idea. Here we will talk about 4 of the main financial benefits to buying a home, and then we will cover the other benefits.
Buying a home is an investment. Why you ask? Well, to keep it simple, there is a possibility of getting more out of it than you put into it. Now, this is not guaranteed; it is not guaranteed just like putting money in the stock market isn’t, but there are those times when you can make money off of the home. If you buy a home for today’s market price, in 20, 40, or 60 years, the likelihood that it will have appreciated in value is pretty good— though once again, not guaranteed.
So, if you look at the average mortgage payment and the average monthly rent payment here in Boise, you will find that they aren’t very different with the rent payment being slightly lower. So, many people that don’t mind the apartment life will rebuttal with this difference in price saying that the apartment is cheaper. This may be true, but you have to take a moment to look at what you get when you pay a mortgage payment vs. what you get with a rent payment.
The rent payment is simple. You pay your rent, and you get to stay in the apartment for the next month. But what about a mortgage? Shouldn’t that be it also? Well, to be honest, you get a lot more from paying your mortgage. When you pay your mortgage payment, yes, you do get to stay there for the next month, but that isn’t all. You also own a certain amount more of the home each month. A mortgage is essentially a long purchasing process. You will own more and more of your home each month as you make your payments. With an apartment, on the other hand, doesn’t do that for you. With each payment, you don’t own any more of it. In fact, you own none of it.
It is Cheaper In the Long Run
So, as an extension off of equity building, there is also the end to keep in mind. If you think about it, after you have paid off your mortgage, you own the house, and you don’t have to make those monthly payments anymore. However, that point doesn’t come ever with an apartment. After 30 years of rent payments, you could have paid for a home. However, you will still need to keep paying month after month for that apartment you’ll never own.
There are many tax advantages to owning a home, some of them small and others of them quite large, it just depends on your tax bracket and your home. This area of real estate is complicated and should be handled by a tax accountant or someone equally as qualified. Contact someone who can help you navigate all the tax laws before you try taking them on yourself.
Non-Financial Benefits of Buying a Home
You Can Change or Alter a Home
The biggest benefit to buying a home instead of renting is that you can change the home. Altering a home can be a fun way to make your home fit your ever changing needs . . . And it’s fun. However, if you live in an apartment or even a rental home, you won’t be able to do so much as paint a wall without getting permission from the landlord.
You will eventually want to change up something about your residence, and instead of moving, you might as alter the home. So, from that perspective, buying a home is totally worth it.
You can make it a true home instead of just a house
Another thing to keep into account when it comes to renting vs. buying is that, as we mentioned above, you don’t own the home, and as such you could be evicted, or the ownership could decide to tear down the building and so forth. With that kind of uncertainty, it is hard to call any one place home. When you buy a home, though, you can call it home since you know you will be there for a while longer.
So, if you want to save money, invest a little, be able to alter your home, feel like you can make it your real home— and are in a financial position to do so— then yes, buying a home is a good idea. However, give it some serious thought. You don’t want to rush into it, but when you are ready, don’t hesitate to make the leap.