Exclusive Buyer

If you think you might be ready to take the plunge into homeownership, it’s important to understand the advantages and disadvantages of both buying and renting your home. ADVANTAGES OF BUYING YOUR HOME 1. Building equity. Every time you make a mortgage payment, you put down dollars toward equity — which means actual ownership of your home. Part of the payment goes toward interest from the loan, part toward homeowner’s insurance and property taxes, and part toward the loan principal, which represents the equity. The other way homeownership builds equity is that, generally, your property should appreciate in value each year, giving you the option for selling it for considerably more than you paid for it, assuming you keep up withmaintenance, improvements, etc., and sell at the right time. Typically, U.S. home prices appreciate nationally at an average annual rate of between 3 and 5%. Renter disadvantage: Renting does not offer any equity- building advantage. Your rent payments go to the landlord and not toward your property ownership, regardless of how long you live there. 2. Increasing your home’s value. As I touched on, your home’s value will increase through natural appreciation every year, but you can increase your home’s value by not onlymaintaining your home, but also improving upon it, such as small renovations, finishing a basement or adding a bathroom, improving the home’s curb appeal, andmaking small improvements around the home (newer appliances, a fresh coat of paint, new curtains, etc.). Renter disadvantage: If you rent your home, you will likely have limits on what you can do to improve the look of your home;