where you believe home values will continue to appreciate and that will serve your needs, e.g., proximity to schools, shopping, recreation, etc.? Are you ready for devoting the time and attention to maintaining a home, e.g., leaf-raking, grass-cutting, appliance maintenance and repair, etc.? Taking care of your biggest investment can be gratifying but only if you’re ready.
ADVANTAGES OF BUYING YOUR HOME
Control over housing expense. By selecting a fixed-rate 15-, 20-, 25-, or 30-year mortgage, the homeowner has assurance that the mortgage payment won’t increase, and, in fact, will be eliminated at the end of the term (subject to refinancing). Homeowner's insurance and real estate taxes normally will increase. You build equity. Some of each monthly mortgage payment goes toward the loan’s interest. Other portions may go to homeowner’s insurance and real estate taxes. The remainder pays down the loan principal. Every dollar put toward your loan’s principal represents a dollar of equity, actual ownership of the property. The property should appreciate in value each year, further adding to its equity (what the house could be sold for versus what is owed on it). Discounting certain blip periods, such as the 2008 housing bubble burst, home prices in the U.S. appreciate nationally at an average annual rate between 3% and 5%. Homeownership won't make you rich overnight, but by renting, you're paying someone else's mortgage. In effect, you're making someone else rich. Remember, though, home value appreciation in different metro areas can increase at markedly different rates than the national average. Improvements increase your home’s value. A homeowner can also increase a home’s value through home improvements, thus making your home more comfortable and enjoyable while growing its loan-to-value (LTV) ratio. For instance, adding a
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