Welcome to the world of real estate. I sell Fredericksburg homes for sale each and every day. I’ve met many clients that asked the same question many times. They ask if it would benefit their needs better to buy a home or rent. I explain to them time and time again that it depends on their situation. If they are in a position to own their own home, it’s a no brainer. There are other situations where relocation clients decide to rent first to make sure they’re going to like the area. The plan is to buy a home about 6 months later if they like the area. I downside to this frame of thought is that the current market may change and home prices may go up. Remember, if you buy now, you’re buying on the bottom. You should be in a position in the future to make a profit if the market heals.
I recollect a transaction about 3 years ago. I had clients that had rented homes all their lives. The husband was a retired Military Major. His wife was a stay at home mom. They explained to me that they were reluctant to make a permanent decision due to the fact that they moved often with the Military.
I’ll call him Bob and his wife, Carol. Bob advised me that he and Carol made a huge mistake over the years renting. He stated that they should have made numerous purchases and gained equity and profit. Instead, they gave that money away to the landlord. Now, at the age of retirement, they don’t own anything. Bob stated that he and Carol noticed that all their friends of the same age group had paid off their homes. They told me that they kept making plans to one day buy a home. They never made a commitment to meet a Realtor and start the search. I was really hurt by their situation. I ended up finding them a really great deal. Hopefully they may gain equity quickly so they can make some profit. They even found a home that was larger than the house they were renting and their current mortgage payment was lower.
There are studies that show that owning your own home may create an increased education level for your children, you have a better quality of life, the community progresses, there is a lower teen pregnancy rate and your children have a higher annual income when they become adults. Please find the five main advantages below.
1) Stable Monthly Payment
Rent costs may rise each year or be unpredictable. Most mortgage payments are locked and remain unchanged until loan maturity date. The only increase or decrease may occur if your taxes and insurance are built into your mortgage, which usually is the case. If your tax assessment goes up, the payment will go up to compensate for the increase. This usually isn’t much at all. Home owners feel comfortable knowing what their payment will be. They can budget their cost more effectively.
2) Tax Refunds
Renters are not eligible to receive any tax breaks. Homeowners may claim their mortgage interest on their taxes. This may be a substantial amount of money. Remember, most mortgages gather their interest on the first half, give or take from the note. This paid interest may come back to you at tax time.
3) Refinance
We are seeing record lows on current interest rates. You may be in a position to refinance your loan to pay off unwanted bills or consolidate. That option is yours if you own. Renters don’t have that option.
4) Increasing Equity
Homeowners can watch the value and equity grow. Remember, if you buy on or near the bottom, your equity will grow as the market heals and comes back up. This equity is appreciated if you are ever in the market of selling your home. This equity is your investment. Renters gain no equity.
5) You Own the Home.
When you’re the homeowner, the home belongs to you. You are in control. The sky is the limit on what improvements you may bring to it. You can decorate it to your taste, change style, paint, open the floor plan, plant a lush green lawn and maintain a huge landscape. These are all things that a landlord will require permission to precede.
You can start your home ownership as early you want, as long as you’re approved. This equity is like money in the bank. It also builds up your credit rating. I’ve had college students’ purchase their off campus homes and continue to rent after graduation. This is smart. Their investment should grow.
Purchasing a home is one of the most important events one will endeavor in a life time. This transaction needs to be organized by a professional Realtor. In Virginia, the seller pays for the Realtor’s commission, not the buyer.
Owning a home, as explained has many advantages. This home ownership isn’t for everyone. There are added responsibilities. Please find the disadvantages below to consider before you make your decision.
1) Increased Monthly Costs
In most cases, your expenses should be lower than with renting. In some cases, this may increase; depending on the house you’ve chosen, taxes, insurance and utility expenses. Also remember that maintenance and upkeep are possible added expenses.
2) Permanent Location
A renter can just up and move to anywhere once their lease expires. Homeowners may put their home on the market to sell. This selling process may take some time, unless you have an expert Realtor assisting you.
3) Home Value May Decrease
In most situations, your home value should increase. There are some risks that the home will regress. Watch for overpriced homes or homes in older areas where neighbors are letting their homes go down. The market may go down even more. No one really knows what tomorrow may bring. Be prepared for the worst and face the best.
4) Loss of Job – Foreclosure Risk
There are rare events that may occur like losing your job or health decreases. If you can’t make your payments, the lender could move to foreclose the property to gather lost funds.
Please take your time to make that very important decision based upon your needs. Compare the advantages with the disadvantage. If you decide that now is the time to purchase a home, call on me, Tom Smith, Realtor with Fredericksburg Homes for Sale. I will give you 100% of all my ability to make you happy. I appreciate your business. My appreciation will be expressed in the outstanding service I will provide.

By: Tom Smith
Associate Broker, Century 21 Adventure Redwood