Buying a home can be an intimidating process for many potential home buyers. The purchase of a home means a lot of commitment and many people may simply assume they cannot afford to buy their own home. However, many home renters would be surprised to find that buying a home is completely feasible and they may even pay less in mortgage than they would in rent. Since the purchase of a home can be a great investment, many renters are now researching how they can buy their own home and start to invest in the future.
Buying a home can be an expensive investment so those renters who are interested in the purchase of a home should have substantial money saved for all the costs. The down payment of a home is the first large amount of money that will be needed and is usually what discourages most renters from thinking they can afford their own home. Most FHA loans only require 3% of the purchase cost down for a home loan. A potential home buyer should speak with a mortgage consultant to see how large the down payment will need to be to purchase a home. Fees such as closing costs and inspections should also be saved before a renter decides to start searching for a new home.
One of the greatest benefits to owning a home is that the mortgage that is paid can sometimes be tax deductible. If the mortgage interest rates are low at the time of purchase, a homeowner is able to deduct up to $100,000 per year on his or her taxes. Being able to deduct a percentage of the mortgage payment from taxes can allow a homeowner to have more money to pay for other bills or to put back into the home to acquire more equity.
Renting a home can work for those residents who are not ready to buy or who are saving money to buy a home. However, the rent money that is given to landlords and homeowners does not help a renter to invest in his or her future. Some renters that do not have the money saved for a down payment but would like to start building equity can look into a lease-purchase agreement. Every lease-purchase agreement is unique so a renter should be able to find an agreement that will work well for his or her budget and goals. A lease-purchase agreement allows a renter to live in the home and pay rent. A portion of this rent is put toward the mortgage of the home, in the renter’s name. This allows the renter time to save up money for an actual down payment on the home or time to raise his or her credit score before being approved for a loan. If a renter backs out and decides not to purchase the property, he or she gets no return profit on the home. Purchasing a home can be a smart financial decision and an investment in the future. There are many options for renters to make owning a home a reality.
More articles:
- Should you Rent or Should you Buy?
- How Homeownership Can Make You Rich, and Renting Can Make You Regretful
- Best and Worst Cities for Renters
- Making Sound Money Decisions: The Top Five Issues and How to Deal with Them
- The Basics of Buying a Home
- Renters – It’s Your Money, Know Your Rights
- Home-Buying with a Friend: Half the Price or Double the Trouble?
- Sharing the Burden of a Down Payment