Buying a house brings in a sense of freedom and pride for a lot many people. It is often considered to be much better than renting a house. When you buy a house your free from the rules set by your landlord. Owning a home is definitely the first step towards building your dream and is also a long term investment. Hence, it is of great importance that you analyse and understand the advantages and disadvantages of buying a house before diving into the process.
Advantages of buying a house
There are numerous advantages of owning a home, starting from painting the wall with your favourite colour or turning your basement into a theatre or a practice pad for your band. Another major advantage of buying a house is that some amount of your mortgage payments comes back as equity. When you rent a house, you never see a penny that you paid. On the contrary, when you own a house, the mortgage amount helps in building equity. You may enjoy tax benefits for having a house of your own too. The property taxes and the mortgage interest amount are deductible, which in turn lowers the overall burden of tax deductions.
Advantages of buying a house
There are numerous advantages of owning a home, starting from painting the wall with your favourite colour or turning your basement into a theatre or a practice pad for your band. Another major advantage of buying a house is that some amount of your mortgage payments comes back as equity. When you rent a house, you never see a penny that you paid. On the contrary, when you own a house, the mortgage amount helps in building equity. You may enjoy tax benefits for having a house of your own too. The property taxes and the mortgage interest amount are deductible, which in turn lowers the overall burden of tax deductions.
Disadvantages of buying a house
Buying a house is a great idea was it comes with a lot of perks. But it is also very important that we understand the potential drawbacks of buying a house, as well. The maintenance cost for the entire house must be taken care of by you. When you rent a house, you can expect your landlord to take care of things if there is a crack on the wall or a broken door hinge. But when you have a house of your own all the unexpected repair costs add up to your personal list of expenses. There’s also a probability that you might lose money as real estate market has actual declines, at times.
Think of how much you can actually afford
If you have finally decided to buy a house, it is also important that you analyse the ratio of debt-to-income. According to most lenders, the mortgage debt should less than 28% of your monthly income, whereas, the debt-to income ratio should not be more than 36%. You must multiply your total monthly gross income with 0.36 or 36%, in order to calculate the exact debt-to income ratio applicable for you.
Find the right mortgage
It is plausible that you will be going for a loan when you buy a house and you must take smart decisions. Your finances can be significantly affected by a bad mortgage. Generally home loans are either have fixed interest rates or adjustable interest rates. With a fixed interest rate you can find stability as your payment amounts never change. However, if the rates offered by the lender goes down, you would still be paying the current rate and spend more money. If you go with adjustable interest rates, you sacrifice the stability factor, but in turn, enjoy the ability to avail lower rates of interest when it goes down.
It is, thus, of immense importance to understand all the above mentioned things before you plunge into the decision of buying a home. A house is your dream and asset and always remember that, with a great house, comes greater responsibilities.
Buying a house is a great idea was it comes with a lot of perks. But it is also very important that we understand the potential drawbacks of buying a house, as well. The maintenance cost for the entire house must be taken care of by you. When you rent a house, you can expect your landlord to take care of things if there is a crack on the wall or a broken door hinge. But when you have a house of your own all the unexpected repair costs add up to your personal list of expenses. There’s also a probability that you might lose money as real estate market has actual declines, at times.
Think of how much you can actually afford
If you have finally decided to buy a house, it is also important that you analyse the ratio of debt-to-income. According to most lenders, the mortgage debt should less than 28% of your monthly income, whereas, the debt-to income ratio should not be more than 36%. You must multiply your total monthly gross income with 0.36 or 36%, in order to calculate the exact debt-to income ratio applicable for you.
Find the right mortgage
It is plausible that you will be going for a loan when you buy a house and you must take smart decisions. Your finances can be significantly affected by a bad mortgage. Generally home loans are either have fixed interest rates or adjustable interest rates. With a fixed interest rate you can find stability as your payment amounts never change. However, if the rates offered by the lender goes down, you would still be paying the current rate and spend more money. If you go with adjustable interest rates, you sacrifice the stability factor, but in turn, enjoy the ability to avail lower rates of interest when it goes down.
It is, thus, of immense importance to understand all the above mentioned things before you plunge into the decision of buying a home. A house is your dream and asset and always remember that, with a great house, comes greater responsibilities.