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Thinking of Buying a Home? What to Know Now
Special to The Truth
Better employment
prospects, rising home values and historically low mortgage
rates are driving improvements in housing markets across the
country. If these facts are tempting you to take the plunge,
you’re not alone.
Keep in mind, buying a
home is a major commitment and shouldn’t be undertaken
without careful consideration, say experts.
“While homeownership is
often referred to as the ‘American Dream’ for good reason,
it isn’t necessarily everyone’s right move,” says Freddie
Mac Senior Vice President and Head of Single-Family Sales
and Relationship Management, Christina Boyle.
Understanding the pros and
cons of homeownership can help you make a wise decision. For
potential home buyers, Boyle offers the following insights:
Ownership Pros
From paint colors to major
remodeling projects, one of the best parts of ownership is
having a place that is uniquely yours to customize.
Consider the financial
benefits, as well. At tax time, you may be able to deduct
the interest on your mortgage and property taxes, offsetting
a portion of the cost of ownership.
Stability is another major
draw. With fixed-rate mortgages, your monthly principal and
interest payments will stay the same for the entire period
of the loan. This will make it easier to plan and budget
over time, as opposed to renting, where rates are largely
beyond your control. Furthermore, creating equity for the
future will help provide stability and security for your
family.
Ownership Cons
Being your own landlord
makes you responsible for the maintenance and upkeep of your
property. Budget for maintenance costs -- from little fixes
to such major, costly issues as roof replacement and water
pipe repair.
Other home-related costs
to keep in mind include utilities, homeowner association
dues, homeowner insurance premiums and property taxes. Just
like with your rent, your mortgage and utilities should be
paid on time. This will help you maintain good credit and is
essential if you want to borrow again in the future for home
renovations, new cars or student loans.
Self-Assessment
An honest self-assessment
can help you determine if buying a home is right for you. Do
you have a reliable income, good credit and documentation to
verify your savings? Do you have the money required for home
maintenance and a cash reserve that can withstand a loss of
job, illness or other financial setback?
Freddie Mac recommends
that potential buyers be able to afford at least
three-percent of the down payment and related closing costs.
Also, evaluate your life plans. Are you planning on staying
in your home for at least five years?
Crunch the Numbers
Free online tools can help
you get down to brass tacks. For a rent vs. buy calculator,
a tax savings calculator, as well as tips, videos and
tutorials needed to make well informed decisions, check out
“My Home,” at MyHome.FreddieMac.com, a one-stop reference
designed to help people become smarter homebuyers,
homeowners or renters.
Before taking any major
plunge, get informed. An honest appraisal of the facts and
figures can ensure a sounder financial future.
Courtesy StatePoint
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