Is Buying a Home a Good Investment?

I touched on this in my earlier blog, but it was mainly focused on when to buy. I didn’t really go into detail as to why one would want to buy a home. So, here you go…

First, I’ve always heard from family, the media and, of course, real estate professionals home purchases are always a great investment. However, there are also risks. It’s important to know both before making a decision.

Let me educate you on the Pros and Cons of buying a home so you can make the decision as to whether it’s the right choice for you.

CONS (yes’ I’m starting with them first):

·       Yard maintenance – owning a home can mean regular lawn work: mowing, edging, weed-pulling, mulching, fertilizing, planting, pruning, and repeat. Weekly. Sometimes more often.

·       Deed Restrictions – These are a set of rules and regulations that are written into a property’s deed that can “restrict” what you’re allowed to do with your property.

·       Homeowner’s Associations – This is an association created for a community that ensures certain standards are kept within that community, as well as try to better the community through activities, education, and community involvement.

·       Repair and Upkeep/Remodels – With every home comes some type of upkeep. Things eventually break down, walls need repainting, appliances, fences, windows, floors, air conditioning/heating units and water heaters all need repair/replacement at some point, which can sometimes be costly.

·       Locked in – Once you own a home, your mortgage is yours for as long as you’ve decided to pay on the loan—usually 15 or 30 years or until you sell it. This could also mean trouble if you were to lose your job and not have enough money saved to continue paying your mortgage. Not paying could lead to losing your house. Sometimes a house actually loses value over time if you have a high interest rate, don’t maintain the home, insurance amounts and if taxes decrease significantly.

 

PROS (I saved the best for last):

·       Pride in ownership – Knowing your money is going towards something you will eventually own outright (like making payments on your car) gives you a sense of pride. You’ll want to protect what is in most cases your largest investment. Regular maintenance will help your home stay pristine for the long haul!

·       Tax Incentives – Homeownership actually allows you to deduct interest on your mortgage payment, taxes and some of the costs in actually purchasing your home, as well as certain tax breaks.

·       Freedom – Within the deed restrictions and HOA guidelines, you are able to do whatever you want with your home: paint the inside (and sometimes the outside) whatever you want, make any updates you like, turn your yard into a squirrel sanctuary--no one can say a word, although you might get a few comments.

·       Consistency – Unlike renting, your mortgage will basically stay the same, and can even decline as you get closer to the end of your loan. No rent hikes!

·       Home Value Appreciation – Here in Austin, Texas, we have seen consistent growth, sometimes crazy growth, in the last 10 years, and it’s predicted this will continue for the near future. While some factors such as location, timing, neighborhood decline can negatively affect your home value, historically there is long-term stable growth in the value of a home.

·       Equity – Equity is simply the value of the home minus what you owe. Ex: You owe $80,000 on a $100,000-valued home. You now have $20,000 equity. Every time you make a mortgage payment, you pay down your loan and build equity. Typically, what you owe you’ll see again in your future (i.e., you buy a home for $100,000; five years later you may be able to sell your home for $150,000…not a bad profit! Can’t do that with an apartment). Even on the more conservative end, if your home doesn’t appreciate, at the end of your mortgage you have a home you own, free and clear, unlike paying rent which you never see again.

Overall, I believe with a knowledgeable realtor, purchasing a home is a good investment as you build equity over time. Text or email me if you’d like to talk more about what’s right for you! 512.791.6918/lisawaddill@gmail.co