I recently saw on the www.freddiemac.com website advice for first time home buyers to help them make the decision of continuing to rent vs. the advantages of owning your own home. A few clients that I have met recently are facing these types of questions and trying to consider what's the best decision for their situation. Here are some of the things to consider from FreddieMac:
There are many great reasons to consider owning a home: You'll have a place that is yours! You may pay less to own a home than you would to rent – and it's yours at the end! Your monthly payments won't ever go up if you choose a fixed-rate mortgage! You'll build a good nest egg! For the local Cambridge, MA market here are some examples of real list prices for a 1 bedroom condo and what it could cost to own: $265,000 - 30 year Mortgage - Estimated monthly cost $1888.80 $285,000 - 30 year Mortgage - Estimated monthly cost $17980.11 $299,000 - 30 year Mortgage - Estimated monthly cost $1920.35
You'll own it, have a place to raise your children and become a part of your community. You can pass your home down to your children, and their children, creating security for generations to come.
Homeownership can reduce the federal income taxes you pay. You can deduct the interest on your home mortgage and property taxes you pay on your home on the tax returns you file each year. These tax savings partially reduce, or offset somewhat, the actual cost of owning your home.
If you choose a mortgage with a fixed-interest rate (one that stays the same for the life of the loan, say 30 years), you'll pay the same mortgage payment each month for the entire 30 years of the loan (if your taxes go up, your escrow will go up – increasing your monthly payment).
Owning a home and building equity is the single greatest source of financial security and independence for the majority of people who've taken this step.
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