When thinking of purchasing a home, there are many factors to consider. First, what are the benefits of purchasing a home as opposed to renting? Second, what type of property should be considered? Third, what are the costs involved in purchasing the home?
Purchasing or Renting a Home
By purchasing a home, home equity is accumulated over time, contingent upon the current real estate market. In addition, there may be tax benefits that a homeowner may qualify for when owning a home as opposed to renting. When renting a home, no home equity is built as there is no ownership of the property. The cost of renting may actually be higher than a mortgage payment.
What Type of Property to Purchase
There are a variety of property types available in the real estate market. Condominiums are similar to an apartment and are typically smaller then a single family home, and no land is owned. A condo association governs the community and imposes regulations and rules. Single family homes are the most common type of property found, where a structure and land is owned. The last type of property is multi-family housing. This can range from two units to four units. By definition, a duplex is a property that is comprised of two units. The property may be comprised of two detached structures or the units may be located side by side, housed in a single building structure. A common reason for purchasing a duplex is for investment purposes, to earn income by renting out the units. Another common occurrence is to occupy one unit while renting out the other unit, to assist in covering the costs of the mortgage.
Costs Involved in Purchasing a Home
A down payment is typically required when entering into a contract to purchase a home. If the potential Buyer is applying for a mortgage, there may be fees involved depending on the type of loan. Many mortage lenders offer a variety of mortgage loan programs with a variety of interest rates. A mortgage calculator can figure out the principal and interest for any type of loan.
The settlement statement will list all related fees and closing costs associated with the purchase transaction. If a mortgage is obtained by the Buyer, ownership of the home is typically completed after the funding of the mortgage has occurred and the Seller has received their proceeds, along with any other third parties for any services rendered in relation to the transaction. Third party fees may include such items as real estate commissions, title fees, and county government recording fees.
The first step any potential home buyer should do is obtain more information from a knowledgeable source.