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Owning your home is like owning a piece of the American dream. It’s yours. It’s a space you remodel and decorate the way you want — without getting the landlord’s permission. It’s where you will make lifelong memories with your loved ones.
For many of us, homeownership is also a path to financial security. Homeownership increases your long-term wealth as your home increases in value, and when you pay down the mortgage. A recent survey indicates that a homeowner’s net worth is 35 times greater than that of a renter ($195,400 vs. $5,400).*
But homeownership is not for everyone. Or, it may not be the right time in your life to become a homeowner. Before you take the plunge, consider these 3 questions:
If you’re planning to buy a home, you should feel secure in your current job, have a steady income and be ready to stay put for the next 3-7 years. If you’re thinking about starting your own business or looking for a new job, this may not be the right time to buy a home. If a new job takes you to another city, it could be hard to sell a home quickly. If you make a move during a housing market downturn, you may lose the cost you put in. Finally, the cost of buying or selling a home can be significant – think closing costs, inspection costs, and the like.
With the Bay Area’s high rents, it may seem to make more sense to put that money towards a mortgage. But to buy a home, you must factor in all costs of homeownership — and qualify for a home loan. Planning is the key to a successful path to homeownership with minimal amount of stress. Check out our video on the four key steps to home buying.
Let’s face it, renting has its advantages. You are more carefree. You can leave when the lease is up and, if something breaks, it’s the landlord’s responsibility to fix it. When you become a homeowner, you will be responsible for fixing the leaky plumbing and paying the bill. While you don’t want to deplete all of your savings after buying your home, the initial period after you move could be challenging as cash flow could be tight. You may have to make sacrifices and give up vacations or nights out on the town. However, with some discipline and proper planning, the dream of home ownership could be within your reach.
Learn more considerations for homeownership at our interactive online tool or talk to your local Patelco Home Loan Consultant.
* Source: 2010-2013 consumer finance survey by Federal Reserve.