First-Time Homebuyer's Guide - Part 2

Why do you want to buy a house?

Before you decide to buy a new home, you'll need to decide why you want to buy a new home. Like many steps in the mortgage process, this one will require a look in the mirror to determine your motives.

Taking human nature into account is essential when thinking about your first home purchase. To help guide you through the thought process, we've outlined a few good reasons and bad reasons for seeking home ownership.

Bad Reasons

Optics
Is it a financial decision or a status decision? If you're looking to buy a home because it just sounds cool or you just think you should, maybe because you're a certain age, chances are you may not be ready. Owning a home extends far beyond your standing among peers; it involves financial planning, resourcefulness, and a ton of responsibilities that renting does not require.

Flipping
You've watched Ty Pennington on Extreme Makeover doing his thing, turning average homes into shining palaces and making it look fun. You think to yourself, "I could do that!" Then you think to yourself, "I could make money doing that." Wrong. 'Flipping' a house is not as easy as it sounds, and certainly not as easy as Ty and his team make it look.

Buying an average or run-down property and rehabbing it for resale at a profit is something that professional contractors with years of experience often fail to do. Taking on a fixer-upper that needs moderate repairs so you can live in it comfortably is one thing, but flipping for profit is best left to the pros.

Good Reasons

Investment
Real estate is a good investment, simply because it is a limited resource within an ever-growing population. However, buying a home as an investment requires that you occupy it long enough for its appreciation to outweigh property taxes and other expenses that you wouldn't have to worry about as a renter.

Regular Monthly Payments
As a renter, you're at the mercy of a landlord when it comes to your monthly payment. Depending on the market or the property owner's personal economic situation, you never know if you'll be paying more (or much more) than the amount of the previous lease agreement. When you own a home you'll know what you're paying each month and can budget the rest of your finances accordingly.*

Creative Freedom
As a homeowner, you can decorate, landscape, and renovate however you want. Other than municipal zoning restrictions, there is nothing standing in your way when it comes to updating and beautifying your surroundings. This is obviously not the case when you're renting.

Relocation
Whether you're moving because of a job, or just because you need a change of scenery, buying a house is an ideal way to upgrade your space, for you and your family. In addition to setting you up for success in the next chapter of your life or career, buying a home is one of the tried-and-true routes to generational wealth.
Should this move not be a permanent one, and you need to relocate again, it's still a great way to build equity in the meantime, which could, in turn, be applied to whichever new home you decide to dwell in the future. It's a win-win scenario.

Community
If building meaningful relationships and feeling like a part of the community is important to you, owning a home can create that sense of belonging. A house means you're invested in how the area looks, how good its schools are, and how safe it is for your family.

As a renter you're looking for a good deal in a decent neighborhood; as a homeowner you're looking for good people to share in the creation of a great neighborhood.
Part 3 of this series is coming soon! Next time, we'll talk about some of the financial things that can determine how eligible you are as a potential buyer. If you have questions about the mortgage process, contact us today! We're here to help.

*Adjustable Rate Mortgage interest rates and monthly principal and interest (P&I) payments are subject to increase after initial period.