5 Reasons to Purchase a Home

When you think the time has come to purchase a home, you are often asking yourself several questions.

"Should I purchase a property?

"Is now a good time to purchase a home?"

"Should I keep renting?"

"Can I afford to buy a home?"

"Will I qualify to obtain a mortgage?"

Let's go over various reasons when it can make sense to purchase a home.

1) You're paying too much money in rent.

Do the math to see how much you pay each month and each year. Some individuals started with what they thought was reasonable rent a few years ago. The problem is when they're still paying rent years later, and now its quickly added up.

For example, an individual paying $3000 per month in rent can easily be at $36,000 per year and within two years, its $72,000 in rent that was paid.

A family paying $4000 per month in rent is paying $48,000 per year. In four years, the family has paid nearly $200,000 in rent.

What about the family paying $5000 per month, $10,000 per month or $20,000 per month in rent? It's all relative depending on the budget, type of property, area, etc.

But, at the end of the day, you as the tenant have helped the landlord pay their own mortgage instead of your own mortgage. The above examples aren't factoring in potential rent increases which often happen and will cause you to pay more rent the following year.

2) Staying in the home

If your job or personal desires have you frequently moving around to different cities, states or countries, then buying a home may not make sense. For most of us, if you're staying in the same area, it can make sense to strongly consider owning your home.

Renting for a year or two can often give you a sense of the neighborhood and provide opportunities to take a test drive. If you like the area, it can make sense to start exploring the option of purchasing a property there.

Just be careful to get into the habit of staying put because renting for too many years can often put individuals at disadvantage. Some tenants get comfortable and will rent year after year. Several years later, they have really helped make a dent in the landlord's mortgage instead of paying down their own mortgage.

3) Making a home of your own

Most homeowners like to make a home their own. This can be from painting to decorating to furnishing, and more. While you can do some of this with a rental, you will have limitations. Also, yuo need to be careful as whatever money you put into someone else's property is generally not something you will get back. When you leave, you simply give the keys back.

If you own the property and decided to renovate a kitchen or bathroom, paint the home, add a pool, etc, you're actually adding value. These types of upgrades have the potential to be recouped and in many cases raise the value of your property. You can really own your domain and enjoy it!

4) Generational wealth

There are studies that show families that own real estate generally have more wealth than those who do not own real estate. If you have children or other heirs that you would eventually like to leave something for them, consider a home. Many people who work most of their lives, have been renting for years and sometimes decades, and then eventually realize they have no major assets to show for. Once they purchase a home, pay down the mortgage overtime and build equity, they can do something with the asset. The home can be left to the family. Certain families will have the next generation live in the home. Other families will inherit the property, sell it and use the funds for other expenses or potential investments.

This can run the gamut. The good news is that you made a wise decision to purchase the home at some point, and allow your asset to grow in value over time!

5) Pre-qualifying now to be ready to buy.

I'll give you an example or two. An individual thinks he or she is ready to buy, gets pre-approved and then decides to wait 6 months to a year. During that time, the individual changes jobs and when they think they're ready to proceed, they are advised they have to wait due to their employment status.

Another individual gets pre-approved and decides she wants to renew her lease for another year. Before she knows it, its nearly two years later which means two more years of rent were paid. And, now when she looks at home prices, she sees the prices are significantly higher than they were two years prior. This is because she lives in a desirable area, there is little room to build homes, and new people keep moving to the area. Its a common supply and demand problem.

The rationale is that you if you believe you're ready to buy, and can get pre-approved, it often makes sense to proceed. This is especially true if you plan to stay in the area. You'll be happier a few years later when you have some equity in your property rather than counting how much you had spent on rent over the past few years.