For first time home buyers with favorable credit and modest savings, there are many different types of mortgage loans available to suit most situations. Whether you choose from an FHA mortgage loan, VA loan, ARM loan or others, the benefits of homeownership are many.
Consider the following when weighing the pros and cons of home ownership:
Making energy-efficient improvements to a home such as adding insulation or upgrading an air conditioning unit can greatly reduce the monthly utility bills. Renters can still make energy-conscious choices of their own (such as turning unused lights off), but homeowners have the advantage of being able to make major structural changes, such as adding solar panels or even installing a roof made from energy efficient materials such as foam, metal or tile.
Whether you would like to install wood floors or remodel your kitchen, owning the space you live in means you have the freedom to do so, without worrying about losing your security deposit. Whether customizing your home is as simple as painting the walls in cheerful colors or as major as adding on a second story, the design choices are yours to make.
Since homeowners must pay their mortgage each month, they are required to make periodic payments that build equity in the home. Paying a mortgage is a long term investment that can take the place of spending money on luxuries such as expensive meals or shopping trips. Even if the homeowner decides to sell the home after the mortgage is paid off, there is a good chance they will walk away with a payoff, even after subracting the costs of ownership.
Renters could become subjected to an unexpected eviction notice if their landlord decides to sell the home, rent the home to someone else, or otherwise end the lease. In contrast, homeowners are their own landlord; they decide what changes and repairs to make and who can live in the home.
In particular, homeownership is recommended for older people if they do not have a steady income or significant savings to draw on in the case of a sudden eviction.
Fixed mortgage rates cannot go up, even if the cost of everything else goes up. Homeowners who wish to protect themselves from market fluctuation or rising housing costs should protect their future by making a 20% down payment and taking out a 30-year fixed rate mortgage loan to lock in today's low rates.
Interest rates are at their lowest at the moment, and at the same time, home prices in many areas have stayed the same. In suburban areas, deals on homes are plentiful compared with the high cost of living in many cities. Asking prices on homes went down by 0.7 percent over the last year, whereas rents went up by 5 percent (Capital Economics). Take advantage of favorable market conditions and take the plunge into homeownership.
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