Renting is convenient. And it’s not like you’re throwing away your money. It puts a roof on your head. It gives you a place to bathe and somewhere to store your stuff. But just think about this —if you already have a well-paying job, one that you’ll most likely keep, then maybe it’s time to consider buying a house. After all, there are many benefits for first time home buyers.
Buying your first home can be a long-term investment. We’re not saying just because you have a steady job then go ahead and buy the house of your dreams. We’re saying that it might just be the right time to start considering that real estate investment. Share this useful information on your platform. Want to increase your social media visibility but do not know where to start? Socialgreg has got your back, buy instagram followers and build your dedicated following.
Should I Buy A House?
First off, you should buy a house for the right reasons and with the right mindset. Don’t let anyone force you into making a decision before you are absolutely ready. Buy that house because:
- You know and you feel that it’s a smart financial decision
- It is the right thing to do as the next step in your life
- It is going to improve your quality of living.
The Right Time to Buy a House
While buying a house is a good investment, do not pursue it solely for the hopes of increasing market value and hoping to earn from it after a few years. Your property would most likely increase in value 10 years down the line. The more important thing now is to start building a home for yourself and reaping the benefits of owning your home.
You also need to make sure you understand whether you are in a good position to buy a house. Your finances are not your only consideration either. If your social and professional life is in order, then now is most likely the right time to finally buy a place to call your own!
Benefits for first time home buyers
Being a first time homeowner gives you a sense of pride and accomplishment. Some would even consider it as their official introduction to adulthood. And there are many benefits too!
Having your own property gives this feeling of security, permanence, and rootedness. You can have full control when it comes to fixing and remodeling your living space. And, you will most likely take better care of your home because it’s yours.
Renting vs Buying
As the homeowner, you will also have fewer worries. You won’t be stressed out that your landlord might suddenly decide to stop renting out the property.
It’s easier to call the shots when it comes to interior designing if you’re the house owner. If you’re renting, you need your landlord’s consent even for simple wallpaper attachments or drilling holes on the wall.
You’ll be shelling out money whether you rent or own your home. But if you take out a mortgage instead of paying rent, the property will eventually belong to you. This means that you’re free to do anything you please.
Here’s a quick comparison between buying a home and renting.
BUYING A HOME
Choosing between renting a home or buying one is among the biggest financial decisions you’ll ever make. You have to take several things into consideration, like how much money you saved. You need to know how much you can allocate to living expenses each month. Don’t forget to consider how long you are planning to stay in one place.
Thinking about all these things might make it hard to decide whether buying or renting is the better deal. Renting provides much flexibility but the benefits for first time home buyers are attractive as well.
To help answer your questions, you can access this renting vs buying calculator to guide you through and make the decision-making process easier for you.
If there are a lot of benefits for first time home buyers, then why are people not buying houses?
Renting is perceived to be better than owning a home. Job security is also one of the reasons why the younger generation tends to hold back on buying their first homes.
Data from the University of Minnesota reveals that Americans in their 20’s prefer to rent than to buy a home and understandably so since buying your first home requires more money. Moreover, individuals in this age group are more mobile and less likely to settle down yet.
Millennials are also less likely to buy a home compared to their parents and grandparents at the same age.
If you are a millennial who is yet to buy a home —what’s your reason for not buying a home?
Why are you hesitating? Could it be because of your student debt? Is it the feeling of not wanting to settle down in one place yet? Or is it simply because you’re not financially ready? Or are you into the backpacking lifestyle?
Despite having hesitations, it never hurts to consider the thought of buying a new home. Purchasing the right property now may improve your financial security when you enter retirement.
What To Look For When Buying A House
There will be moments when you think that – This is it! This is my dream home!
However, when you’re buying your first home, always act logically and rationally. Don’t fall head over heels in love with the first house that checks off all the boxes.
When you think you found the one, take a step back and reassess. It’s rare to find a house that meets all your needs for sure. But, think with your head. Going in for the kill tends to make you overbid which is never a good thing.
Important Factors When Purchasing A Property
Location, Location, Location
Properties in the right location always see the highest price appreciation and home valuation. For instance, homes in a good public-school district tend to be on the pricier side. Since there would be a high demand for access to schools offering quality education, expect home prices in these areas to cost you more.
Aside from choosing a location with great investment potential, consider the safety and security of the town or neighborhood. It’s also important to find a place that is easily accessible to and from your school or office.
Check different financing options to find the one that you can afford. Research on the best mortgage lenders and see which ones offer benefits for first time home buyers. Find the loan product that provides enough flexibility and reasonable loan rates.
When buying your home, don’t just focus on loans. Look for first time home buyer grants too! There are a lot of grants that may help you pay for your down payment and closing costs.
Evaluate The Overall House Condition
Your home of choice should be at least 75% ready to welcome a new family. Avoid buying a fixer-upper home as you may end up spending more than what you’ve budgeted for.
While at it, make sure that the home’s size is enough not only for your current needs but also your plans in the near future. Think of these factors before you list down the ideal bedrooms and baths, storage space, backyard or outdoor space.
Know What You Can Afford
It’s true that homeownership comes at such a high price. You may have high hopes but you may eventually realize how expensive it is to pay the down payment especially if you’re a first time home buyer. Here are some important things to note to help you reap the benefits of buying your first home.
Always get pre-qualified before checking out properties. Talk to a fee-only financial planner to understand what you can afford and then talk to a lender to get a pre-approval letter for your mortgage
You want someone trustworthy on your side to guide you through the process and transactions. Look for a trustworthy buyer’s agent in your area to assist you. And, do be cautious with listing agents.
Properties may look way different online and in real life. Always look at the properties in person and check out the details of the house personally.
For home maintenance, it’s more convenient to follow the 1% rule. This rule suggests setting aside1% of the property’s purchase price for repairs and yard work each year.
So, if your home costs $500,000, you should set aside at least $5,000 each year. When you own the property, you need to pay for repairs and it’s better to expect the unexpected.
Tax Benefits Of Owning A Home
Did you know that owning a property comes with tax benefits?
When buying a home, it may also be useful to consider the tax benefits like the mortgage interest deduction and tax-free profits for qualified homeowners.
Mortgage Interest Deduction
You can deduct the interest for the first $750,000 you borrowed to buy a primary or secondary home. If you’re single or married filing separately, you can only claim an interest deduction for the first $375,000.
Here’s a quick example.
If you borrowed $400,000 to buy your first home, you can deduct the interest on this loan on your tax return IF you itemize.
For instance, you borrowed another $500,000 to buy your second home. This will bring your total mortgage loans to $900,000. Since you are only allowed to claim the interest deduction on the first $750,000, you can’t deduct the interest on the $150,000 ($900,000 less $750,000).
Are you planning to buy a house and use it as a primary residence?
If you do and, later on, you decide to sell it, you may be exempt from paying capital gains tax.
Homeowners who lived for at least 2 years in the home for the last 5 years get to enjoy certain tax privileges. The first $250,000 profit is tax-free for single filers and the exemption doubles to $500,000 for joint filers.
While these benefits for first time home buyers can be attractive, there are tons of other things to consider before you invest in a new house.
If you’re still unsure, there is no need to rush but it never hurts to start planning for that purchase. Stay on top of your finances and check out properties to get a better idea of the most reasonable budget to buy a house. This way, you’ll be prepared for the costs involved when you finally decide that it’s time to buy a home of your own.
- 5 Tips On Winning A Bidding War When You Buy Your First Home
- Resources For First Time Home Buyers
- Down Payment Assistance Florida (Orange / Seminole)
- 2020 Private Mortgage Insurance (PMI) Cheat Sheet for Home Buyers
- The Top 5 Contingencies That You Need To Know Before Buying Your Home
- Why You Should Get A Life Insurance Before Buying Your Home
Free Home Buying Course
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