Prepare for homeownership

For most people, buying their own home is the biggest and most exciting purchase they will make. Becoming as knowledgeable as possible about the home buying process, and what to expect, will help you reach this goal.  

Advantages to home ownership?

A home is a place that belongs to you. At this point in time you are probably prepared to settle down and become a permanent part of your community. Maybe you need more room in which to raise a family.  Or, perhaps you want more breathing space than you get in a rental unit.

Home ownership can be an excellent investment:

Rents normally increase yearly, Fixed mortgages never change.

Homes "appreciate" or gain value over time except under unusual circumstances.  A house bought ten years ago in Denver for $100,000 would be worth more than $167,000 on average.  This is the same as putting money in the bank.

Scheduled savings.  The credit companies look kindly on homeowners that have paid regularly for their mortgage.  If you ever wanted to borrow money, your house is the most valuable asset for the average family.

Tax incentives.  All the interest on your primary residence is tax deductible.  This can dramatically save you money, especially in the first 10 years of home ownership.

Disadvantages to Ownership?

The actual process of buying a home involves a complicated, time-consuming, procedure with costs other than just the purchase price.

Generally, you should expect to pay more per month (for an equal property) to own than rent for the first few years.  This is where understanding your finances is critical.  You will have property taxes, homeowner’s insurance, utilities, maintenance and personal additions that will increase your monthly cost.  Some you can schedule on your own time, but things like taxes are decided by someone else.

If you don't liek the idea of maintenance, a home can be a burden.  Whether you have the money to pay others to upkeep your house, or do it yourself, time and/or money will be part of taking care of a house (landscape, exterior and interior paint, etc).