The Basics Of Buying A Home – There are many things to consider when shopping for a new home. In most cases today, people are choosing to rent before buying is an option. Here are the basics.
In most cases, it’s better to buy as soon as you can afford to do so. The only exceptions are for people who have very low rent, or who plan on moving in a few years. So the first thing you need to do is to figure out whether buying is even a good idea for your situation.
Most people think the benefit in buying is to “stop throwing your money away on rent,” but in fact, the equity you build is mostly offset by the money you will “throw way” on taxes, insurance, maintenance, and mortgage interest, which renters don’t pay. However, all of those things become tax deductible and can help you in the long run.
Another benefit to owning a home is that you freeze your monthly payment for 15 to 30 years, if you don’t have an adjustable rate. One of the basic principles is that you don’t pay cash when buying a home.
If you had to do that, then nobody could afford to buy a house. Instead, you get a loan from a bank called a mortgage. You make payments on this loan every month for 15 or 30 years, and then you get to stop making payments. However, there is a down payment of 3 to 20% of the sale price.
The higher the down payment you can make, the easier it is to get a loan, and the lower the interest rate is, and the lower the monthly payment is.
Gone are the days of the “zero-down” mortgages. This is why you should be saving your money for a down payment. Owning a home can also benefit your retirement, instead of renting, or living inside an apartment building.