The largest financial decision many people make is to buy a home. It is a major financial decision. Before you make any decisions: Why?
Perhaps you are looking for a larger tulum mexico houses for sale to raise children or a more spacious yard. There is no right and wrong answer. Only the best one for your particular situation.
One important point to remember: The COVID-19 epidemic lit up the housing market like it was a rocket. Prices rose at an incredible pace in 2021, the fastest in 15-years. The prices of the most affordable homes increased 16.5% year-over-year. Homes are being taken off the market at a Usain Bolt-like pace, sometimes without even seeing them.
The boom in buying and sales is expected to continue for several more weeks. It’s great for sellers provided they have found a home to buy. It isn’t so great for buyers who might not be able or willing to pay a downpayment or those who don’t have the time and resources to act quickly. Buyers in a good position to make an offering can find their dream home. They just have to act fast. There is no reason to delay in the housing market.
What are the benefits of owning your home?
- It’s a long-term good investment. Homes do lose value. However, it is not common. The Federal Reserve Bank of St. Louis reports the American average price of homes sold rose 28% over 10 consecutive years, starting in 2009 and increasing by 10% from 2014 to 2019. In the same decade, $11.3 trillion was added to the value of the housing market. COVID-19 will ensure that these market increases continue, at the very least for the near term. The land on which your home sits may increase in value if it falls in value. You are investing in your asset, not a property management company.
- Low-interest rate: Very rarely will we see interest rates such as the one we are currently seeing. Rates are subject to credit score, location, and other factors. However, the rates you see now are very low at or near 2.75%. This is another reason homes are selling quickly. You can borrow money for free with an interest rate lower than 3% It isn’t necessarily free, but it’s close.
- Building equity Equity refers to the difference between what the house can be sold for and what it owes. Your mortgage payment will increase your equity. The equity you build will increase as your monthly payments go to the loan’s balance rather than the interest.
- Federal tax benefit: Mortgage Interest is deductible on the first $750,000 of the home’s purchase price. Also, interest on home equity loans, property, and income taxes up to $10,000 (if married filing separately), as well as closing costs at purchase. The standard deduction increased to $24,800 for married couples ($12.400 for single) making it harder to identify interest deductions. You can get tax benefits by adding all this information to your purchase.
- Better privacy: You can own the property to make changes that you like, something renters do not get.
- A home office: Although the home-office phenomenon will likely not disappear, it is more common to have one. You can have comfort and productivity by having the right setup. It is possible to find the right space for your work-at-home if you act quickly.
- Stable monthly mortgage payments The fixed mortgage is a mortgage that has a fixed monthly rate. This means you will continue to pay the principal and interest the same way until your mortgage is paid. At every renewal of a lease, rents may rise. Although fluctuating property taxes and homeowner’s insurance could change monthly rent payments, that isn’t usually the case as often as rent rises.
- StabilityPeople tends not to move as often as they used to in the homes they bought. The confidence to buy a home is essential if you intend to stay there for many more years.
What are the Advantages of Owning A Home?
- COVID costs The housing industry is in full swing. Sellers often get more than they ask for and can sell quickly. This can make it hard for first-time homebuyers who may have not saved enough to pay the down payment. It can also make it difficult to think about big decisions.
- High upfront cost: The closing costs for a mortgage may be between 2% and 5% of the purchase. These fees include title search, title insuring, title insurance, first-year homeowner’s premium, title inspection, property taxes, and mortgage insurance. These costs can take approximately five years to cover.
- More mobility: If stability is a benefit of homeownership, then you may need to think twice before accepting a job opportunity that would require you to move to another area. This is counterbalanced by the speed at the sale of homes.
- Maintenance expenses: Fitting underneath the kitchen sink to fix a leak can be an exciting (or frustrating) experience for anyone who has ever attempted it. However, if your home is owned, you will be the first to do repairs. Some items do need professional attention. The coolest thing about an air conditioner failure is that you will not only be sweating until it’s fixed but you will also have to write a check to get the cool water flowing again. Some people like to mow the lawn. Others don’t. It’s part of homeownership to trim the bushes, clean the gutters, and shovel the snow.
- Equity is not a quick growth: Most of your mortgage payments go towards interest. So unless the property values in your area rise rapidly, equity won’t increase quickly. If your budget permits, you could increase the amount that is added to your principal each month to help build equity faster. An extra $20-50 per month can be used to increase your loan principal.
- Property values could fall: This happened during the 2008 housing crisis. Other local conditions may also play a role. You can expect your property to fall over time, particularly if you don’t keep it maintained.
- Continuing expenses: If you want to sell your home you’ll need to keep making mortgage repayments as well as maintaining it. If you’ve purchased another house before yours, this means you’ll have to pay for both homes. Although the post-COVID sales enthusiasm helps sellers sell their property more quickly, it does not make them less valuable.
Advantages to Renting a House
- Rent payment may be lower: This may apply if you rent an apartment. Renting is better than borrowing if you cannot afford a mortgage.
- Repairs are not your responsibility. The property owners have to pay for the leaky tap and any other repairs or damage. You don’t have the obligation to account for these unexpected expenses in your Budget.
- Flexibility Your obligations to a place that you rent must not exceed the length and the property owner should be able to quickly find a replacement tenant. This can help you get out of debt if you move before the lease runs out.
- Very low upfront costs: There’s no down payment. Except for a small security deposit (often the cost of a month’s rent), you don’t need to write a check or finance all the costs involved in getting a mortgage.
- No HOA fees: Occasionally, homes are found in developments that require homeowners’ associations to pay monthly dues. These dues are not optional and add on to other expenses. Renting is different.
Financial Advantages of Renting
- It is impossible to change the property. Would you like a deck or patio for entertaining? Would you prefer to have your yard fenced? Would you like to paint the bedroom greyish blue? If you don’t like the results of a rental, there’s nothing you can do but complain.
- You are not adding value to your property. When renting a place, all you have is yourself and the furnishings and dishes you own. It is not your equity, but the equity of the property owners that grows.
- Rent might increase: Although you may be satisfied with your monthly rent, this could change when the lease expires, usually within six months or a full year.
- No credit score enhancement: While paying your mortgage on time can improve your creditworthiness. However, renting doesn’t have the same benefit.
- There are no cosmetic upgrades: If your home looks old, you might just have to adapt.