At some point in our lives, we all have to think about one of the crucial rites of adulthood: To continue paying the rent or make our mind and money together and buy a home? If we look at conventional wisdom, it tells us the second approach is smarter.
Despite that owning a house might have its own perks, there are also drawbacks that you might have never considered before. When you look at the lazy metaphor, many people say that renting is no better than stuffing money down a drain each month. But is this really true? Is it better to pay the mortgage for 20 years, and at least know that you’ll have your own house one day? Or just continue paying the rent with no hope to own a home one day. Let’s see some of the hidden costs of homeownership and then you do the math.
1. Additional costs
Did your AC unit broke down five times this Autumn, or does the grass in the garden grow fast and it needs its mowing? If you’re a renter you don’t really need to worry about such issues. You give a call to your landlord and they take care of it. The only thing you need to do it pay that monthly check and put it in the mail. So, if renting, you don’t deal with these surprise costs. On the contrary, if the home is yours, the responsibility would be yours too. Also, if your landlord pays for utilities like water and trash, owning a house would mean to do such payments yourself.
If the house you bought isn’t new, chances are that it would need some good money every year on upkeep. After all, repairing systems, painting, landscaping, and replacing doors won’t be cheap in the long run. Plus, if you’re thinking to renovate the house you bought someday, you better be loaded.
3. Mortgage interest
Did you know that on a conventional 30-year-term $200,000 loan at a 4 percent rate, the home buyer will end up spending more than $143,000? Believe it or not, the $200,000 house actually costs $343,000. And yet, this 4 percent rate doesn’t look much when we first see it, does it?
4. Property taxes & home insurance
One must consider that especially in a nice area you have to pay a considerable amount of your salary for taxes. It is not that cheap as we might think. Moreover, a lender will not let you buy a home without paying for its insurance first.
You must do the math in your head and also in the paper before taking the final decision. Buying a home is a serious issue that requires careful consideration. After all, this article tends to spread some awareness about home ownership, without the tendency of demotivating you to go for it. People have different theories, but if you make the right decision and wait for that golden opportunity, your money won’t be thrown down a drain.
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