Purchasing Your First Home
After venturing into the world outside of college and finding yourself a steady job or becoming newly engaged, you probably are considering leaving the cheap apartment you live in now for a cozy house. Although you lack credit history and a high income, you still yearn to have a place with an individual address and no loud upstairs neighbors to disturb you. Buying a house may seem out of the question for you. However, before completely ruling buying a house out, weigh your options. Consider the pros and cons of both renting and home owning.
Pros and Cons of Renting
Renting is ideal for those who want to live in a house without the responsibility of owning a house. Rejecting the responsibility of home-ownership does have its downsides though.
Flexible Living Situation
When renting, you can move out of you house within a thirty days notice. You can pack up all of your belongings and say goodbye to your former home forever, no strings attached. This means that if your job suddenly changes location or you discover you hate the area you are living, you can just leave. There is no mortgage or loan tying you to the property.
The most money you probably have to shell out for a rented property is the security deposit and application fee. Other than those costs and your rent, you do not have to pay for any part of the house. Any needed repair or maintenance is the landlord’s responsibility. Unless you caused the damage, there’s no need to be concerned about shelling out money for any necessary fixes.
Credit Booster or Establisher
For those with no or low credit history, making your rent payments on time will help you establish a great credit history. A great credit history can help you obtain loans, other types of financial aid, and sometimes even jobs.
As a renter, you are confined to the will of your landlord. Your landlord can raise or lower the rent at any time. He or she can sell the house from under you and give you just a thirty day notice for you to leave. You do not have any creative control over your property unless explicitly stated by the landlord. This means you cannot paint the house’s exterior or interior a different color or add or detract any space footage from the home. Whatever changes you make to the home must be removable with little to no effort.
Every cent you put into paying rent, you never will see again. Although you do build up credit from paying your rent, your money, at the end of the day, still goes the landlord. He or she can use the cash as they wish. However your landlord uses the money, it is almost a guarantee that you will not receive any return. Renting is like purchasing the same product monthly from a store. While the product is useful, you are not directly investing any money in yourself, but instead in the person who has ownership of the product line.
Additionally, if you live in a rented house for years, the cost adds up. For example, if you live in a house that is worth $36,000 on the market and pay $360 a month in rent, you will have paid the total amount of the house’s worth and more by 8.5 years. Despite this, you do not and will not own the house. Your money was sucked up and is never to be returned.
Pros and Cons of Purchasing a Home at a Young Age
If reading the cons of renting a house made you cringe, perhaps you should consider purchasing your own home. Keep in mind though that buying your own home has many long term benefits and disadvantages.
Owning a home is your chance to prove your financial finesse. To even purchase or finance a home is expensive. You need to save your money properly and have a rock solid income to be a fully capable home owner.
Unlike a rented home, you have complete control over how your purchased home looks. You can paint your interior whatever color you want. You can add as much space or detract as much space as you desire as long as you stay within the area’s building code. You can input any in-home feature you want. What you do with your house is your decision.
Emergency Money Source
Sometimes, dire financial situations happen. Medical bills or a car accident can bring you to your knees financially. In cases where funds are too tight to live, you can refinance your home for some emergency cash.
As said earlier, owning a house is a chance to prove your financial stability. Home-ownership also is a way to test your financial stability. You are responsible for any needed repairs or maintenance checks within your home. You cannot neglect these responsibilities unless you want your home to be impossible sell or inhabitable. These repairs can get pricey and cost you more money than expected.
Inflexible Living Situation
Leaving your house behind requires you to sell the home. Otherwise, you’re stuckwith the responsibility of paying your loans, mortgage, and property taxes although you no longer live in the house.
Loans, Mortgage, and Property Taxes
You will be paying off the mortgage to your house for years to come. In addition to this, you may also be paying loans you took out to meet the down payment. On top of all this, you will have to pay state property taxes every year. Added together, the cost of home-ownership is astronomical.
Remember, purchasing and financing your first home is a significant life event. Make sure the home you purchase fits your standards and your budget. Do not get a mansion when you work a $40,000-a-year occupation. Stick within your price range and get a modest home. If you feel that home ownership is not right for you, do not feel pressured to purchase a home. You are young and there is plenty of time to rent and save.