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Advantages and Disadvantages of Buying a Home
by Joe Taylor Jr.
CMR Columnist
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Deciding between renting a home and buying a home is a vexing dilemma for many Americans. Low occupancy rates in some markets and creative new leasing options offer great deals on rental properties. However, the historically low rate on a 30-year home loan can make anyone think twice.
Advantages of Buying a Home
- Most homes appreciate in value, which can elevate your net worth over time.
- Older homeowners can qualify for reverse mortgage programs that can provide financial structure through retirement.
- By securing a home improvement loan, you can decorate how you want and whenever you want.
- Instead of paying high interest on credit cards, you can roll your outstanding debt into a home loan that offers tax-deductible interest at a much lower rate.
- More than anything else, becoming a homeowner offers a sense of accomplishment and security.
Disadvantages of Buying a Home
- Owning a home exposes you to potential repair bills. A surprise water heater break can suck thousands of dollars from your cash flow, unless you have a home improvement loan in place for emergencies.
- Depending on your income and credit score, you may need to accumulate a significant down payment prior to home loan approval. Without a creative home loan option from your lender, you could end up freezing vital cash reserves.
- If your neighborhood starts to decline, your home value can erode.
The Verdict
Overall, experts suggest renting a property in a neighborhood you like for about six to twelve months before purchasing your home. That way, you can learn the ins and outs of your community before locking yourself into a home loan.
Sources
Coast Hills
NC Cooperative Extension
Waller Homes and Land
About the Author
Joe Taylor Jr. coaches beginning mortgage brokers to provide better customer service and to understand creative financing opportunities.
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