While most potential home buyers, recognize, they need, to save for a down – payment, be prepared for repairs, etc, and afford the monthly costs of home ownership, many, either, ignore, fail to understand, or don’t consider, some of the other, relevant, economic considerations, for whether one, would benefit, by owning a home, of their own. Especially, when it comes to first – time, homeowners, the more they understand, and consider, the wiser, their decision – making process, might be. With that in mind, this article will attempt to briefly, review, consider, and discuss, 5 relevant, significant, economic considerations, for buying a house.
1. Tax deductions: Although, for many, especially, those in, so – called, high SALT states/ regions, the tax deductions, associated with home ownership, are less than they have traditionally been, there is still an, up – to $10,000 tax deduction, on one’s federal tax return, for the state and local taxes, we pay, Therefore, when we consider, whether, there are advantages, to buying, instead of renting, this must be factored in. If the net – numbers, of renting, versus, owning, are compared, and if they are close, home ownership often becomes more economically, advantageous, because of the appreciation, and equity, involved, in owning.
2. Mortgage/ mortgage interest: Mortgage interest, up to that paid, on a $1 million mortgage, is still, tax – deductible, so, when one considers, if it makes sense, for him to purchase, this must also be considered. In addition, a wise consumer considers, whether his monthly costs, are within their personal comfort zone, and strengthens, their enjoyment, etc.
3. Local real estate market: While there is, often, much discussion, about the overall, real estate market, every local area, is different, and certain ones, appreciate more, and/ or, depreciate, less, than other areas/ regions/ neighborhoods! One should, carefully, consider, whether, the location of the particular property, is one, which meets your needs, and priorities, desires, before buying, because, unlike renting, purchasing a home, requires far more commitment, than renting, does.
4. Competitive Market Analysis (CMA): Never purchase a house, unless you check, whether it’s worth, at least, what you pay for it! To do so, the best approach, is to have a professional, real estate agent, prepare a fully – considered, relevant, Competitive Market Analysis, or CMA.
5. Will the assessment match – up, with the price paid?: You won’t get the mortgage, needed, and required, until/ unless, the particular property, assesses, for the amount, you are paying! Mortgage lenders will only provide mortgages, based on the assessed value, not, on what you are paying, so if this property, is not valued, as high as you are willing to pay, you will need, to put down, a larger down – payment, to make up, the difference. Will you have the additional amount of reserves and resources, needed?
Wise buyers review many relevant factors, and these 5 economic considerations, must be considered carefully. Will you be a smart home buyer?