Advantages Of Purchasing A Home Rather Than Renting

It is a big judgment to buy vs rent in Colorado, and it takes careful consideration, as most mortgage lenders will agree. But the advantages of home ownership are striking. For decades, purchasing real estate has been viewed as a highly profitable investment. It is an attainment that offers a sense of pride, financial stability and potential tax advantages.

There are certain responsibilities related to owning a home. Landlords will frequently argue the benefits of renting, and for apparent reason. If you are renting, you're supporting them make their mortgage payment.

The numbers are staggering if you look at it this way. If you are paying $1,000 monthly for an apartment, and you know your rent will go up 5% every year, then over the next five years you would pay your landlord $66,309. If you are currently renting a house, you may be paying much more than that each month. Either way, you get no equity by paying this monthly housing expense and you definitely won't benefit when the property value goes up!

However, if you were to buy your own home or apartment, you would be well on your target toward building equity within that same five-year period. By choosing a fixed-rate loan program, you can have the comfort of knowing that your monthly mortgage payment will never get higher. In fact, you would have the choice of refinancing to a lower rate of interest at some point in the future should interest rates drop, and this would cause your monthly mortgage commitment to decline.

In addition to building equity, there are tax benefits that come into play with home ownership. Based on your tax bracket, owning a home is often less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible, and your mortgage consultant should help you check the tax advantages of various loan scenarios, and share this details with your tax consultant to get feedback on your behalf.

There are also many first time home buyer programs in Colorado. To identify the loan program that is suitable for you, your mortgage broker will need to review your monthly household income, current assets and savings, as well as any monthly obligations you may have for credit card payments, car payments, child support, etc. These prequalification factors, along with the details of your credit score, will decide how much house you can pay for and what interest rate you will pay for financing. It is also essential to let your mortgage consultant learn what your future goals are, since this will help narrow down which loan option is the best fit for your long-term needs.

There are various types of loan plans available, such as "low" and "no" down payment mortgage programs. These types of programs demand the first time home buyer in Colorado to give less than 3 percent of the loan amount as a down payment. FHA lenders rule that the mortgage payment, including principal, interest, taxes and insurance (PITI) should not exceed 31% of your gross income, and the PITI and other long-term debt (car payments, etc.) must not exceed 43% of your gross earnings.

Housing is an expense that makes a big bite out of the monthly budget. If you are a renter and sense that "home" is more than just someplace to hang your hat, consider the advantages of buying real estate. It may be time to take the step into building your personal net worth as a home owner.

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