be ready for it! You’ll need to have the confidence to make plenty of big decisions, from choosing a real estate agent and the right neighborhood that meets your needs to picking the right home and all the “little” decisions that come along with that — furniture, appliances, paint colors, décor, etc. Commitment also means devoting time and energy to the maintenance of both your home and yard. If you are prepared, then you’ll find that this commitment — taking care of your important investment — is most satisfying. 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. 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 with maintenance, 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%. ADVANTAGES OF BUYING YOUR HOME
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