SECURITY CENTER
COLUMNIST / BLOGS
TOOLS
PODCASTS/VIDEOS
How To Invest and Save Money
Britt Erica Tunick is an award winning financial journalist who has spent the past 17 years writing about virtually every aspect of finance. She has mastered the art of boiling down complicated financial topics for readers to understand. |
There are several factors you should consider before rushing out and buying a house and taking on a mortgage. Why Buying a Home Isn't Necessarily Your Best Bet By Britt Erica Tunick Owning a home may be a huge part of the American dream, but when it comes to buying versus renting, depending on where you are in your life, your best choice may not necessarily be to buy. With interest rates still at historically low levels, despite the Federal Reserve’s first raise in rates in December 2015, it is no surprise that people interested in buying new homes are scrambling to take out mortgages before interest rates inevitably move back up. If you are a first time home buyer, however, there are several factors you should consider before rushing out and taking on a mortgage. If you are still relatively early in your career and the prospect of changing jobs and potentially moving to another city or state is at all likely, you may want to hold off on buying property. Even if you have the down payment deposit necessary to buy a new home and mortgage payments may actually be lower than your current rent, it takes time to build up equity in any home you own. Beyond a down payment, the costs involved in purchasing a new home include everything from mortgage application fees, to inspections and attorney fees not to mention any repairs that may be needed on a new house. While you could get lucky and buy a home that rapidly increases in value, there is always the possibility that the market could move against you and that any house you buy could actually decline in value and leave you with a loss if you move away and have to sell during a downturn. And then there’s the unpleasant reality that selling a house, or even an apartment, means paying a 5% to 6% commission to a realtor. While renting an apartment or a home may often feel like the equivalent of throwing money out the window, in reality there are many cases where it can actually prove the wiser move. Renting a property means someone else is on the hook for the cost of repairs, maintenance and property taxes and it gives you the flexibility to relocate far more quickly, and with much less hassle, than having to find a buyer for your property before you can move. Plus, if you have the money you would need for a down payment on a new home and choose not to buy you can instead put that money into an investment vehicle that is likely to rise in value much faster than the average home. |
Archive |