Getting major financial decisions right makes up for a lot of little misfires. The choice when you buy a home is one of the biggest decisions facing people.
It is important to avoid common misunderstandings when people compare the benefits of owning a property with the benefits of renting. To make the right decision.
There is always an exciting discussion when buying vs. renting a house about which financial move is best. The valid points on both sides may be confusing. In reality, a variety of factors decide the response. And recent changes to tax legislation have made homeowners financially less advantageous. It is therefore not easier to understand whether it is better to rent or buy.
To begin with, you have to see if you can even buy a house in an excellent position. Nor are your finances your sole consideration. Perhaps now is not the best time to buy if you're not ready to survive socially, professionally and financially . Even if you have saved money and are ready to go, purchasing could still be an error unless the other parts of your life are stable.
There are some points needed to be taken in to consideration before coming up with the decision.
1. Remember: the No. 1 way to create wealth for most Americans is to own a home.
According to Alanna McCargo, vice president for housing finance policy at the Urban Institute, a homeowner's average net value is far greater than that of a renter. The estimated net worth of the householder in 2016 was $231,520; the renter had an estimated net value of $5,200. Families have developed their wealth over the years and their financial stability through their ownership of a home. Home equity building wealth is a big factor in thinking about whether you want to rent or own.
2. Buying a house does not guarantee a happy life.
Researcher Elizabeth Dunn, professor of psychology at the University of British Columbia says that owning a house doesn't make people happier when you strip wealth accumulation from the equation. She studies how time, energy and technology make people happy.
3. Renting gives you flexibility.
Renters have one particular advantage over owners. While escaping noisy neighbors or following a job offer across the country, it is much easier to pick them up and move. You will take extra costs such as property tax, mortgage insurance or homeowner's association (HOA) fees into account, in addition to the hidden maintenance cost of owning a house.
4. The flexibility of renting comes with a cost: Rent will always go up.
Inflation pushes rents alone over time — and monthly rents can pass through the roof if your neighborhood becomes trendy.
Your monthly payment is, however, a fixed cost, when you own your home (and have a fixed mortgage that means that your rate will not change over the life of your mortgage. McCargo says this provides calmness. And, as inflation increases, long-term living in your home will become cheaper.
5. No Big down payment need to acquire home
Homeownership may have a lower entry price than you believe. Once standard, a 20% down payment was, but today's average of McCargo is 5%.
Be aware that you will probably have to pay a monthly PMI (Private Mortgage Insurance) if your insurance is less than 20 percent. This will increase your monthly payments by hundreds. For a lot of loans, when you have an 80% loan value ratio, you will apply to cancel the PMI, which ensures that your home is 20% more than you owe.
6. Home can give a sense of security
Owning a home drastically changes one’s self. It gives profound sense of security and accomplishment. And surely nothing beats that.
Sexton Group Real Estate Property Management in Berkeley, California is a boutique real estate company specializing in residential sales as well as property management services for properties throughout the San Francisco Bay Area. We have 2 offices to serve you, one in the heart of Berkeley and the other in the heart of Lafayette, California. The Sexton Group encompasses the essence of Berkeley’s charm and Lafayette’s family-oriented vibe all with a relaxed, down-to-earth nature. We are an amazing group of agents whose wealth of experience spans more than 25 years in the industry. Looking to buy or sell a home in Contra Costa or Alameda County? Contact us today for your free consultation!