Step 2: Renting vs. Buying - Should I Buy?
Buying your own home is one is one of the smartest moves you'll ever make.
As a home owner, you'll be able to:
- Build Equity - Since your principal balance decreases and your actual cash equity in your home grows over time, your mortgage payments are a sound investment from the very moment you buy. You build cash equity in your home as you pay down the principal on your mortgage, and historically, most homes rise in value. When you decide to sell your home, the profit you reap from your home's appreciation is tax exempt up to $200,000.
- Stabilize Your Monthly Expenses - Fixed-rate mortgages are more stable than rent, which usually increases annually.
- Reduce Your Tax Burden - The interest you pay on your home loan and property taxes is tax-deductible. Profits from the sale of your home are tax free—unlike most other investments.
- Exercise Personal Choice - You can decorate and remodel your home to fit your own personal tastes and lifestyle.
Advantages/Disadvantages
Renting Advantages
- Less Work - There is generally less work in maintaining a rental unit.
- Less Cash - You need less cash up front to rent.
Renting Disadvantages
- No Equity - You build no cash equity in the property.
- Lifestyle Limitations - You are limited in property and interior decoration options.
- Lack of Stability - Your rent can rise annually.
- No Tax Deductions - None of your rent is tax-deductible.
Buying Advantages
- Equity - You build equity in your home as you pay down your mortgage principal.
- Investment Profit - Most homes increase in value over time.
- Lifestyle Freedom - You can remodel and redecorate to your liking.
- Tax Relief - Mortgage interest is tax deductible, and home-sale profits are tax free.
Buying Disadvantages
- Investment Risk - Property values may decrease.
- Reduced Mobility - You generally have to sell the house before you can move.
- Unplanned Expenses - You are responsible for all repairs and maintenance.
First Time Home Buyer In Chicago
It's your first big step into real estate. You're buying your first Chicago home. The home buying experience can be extremely rewarding—at last, you'll have your own property where you can paint the walls any color you want! Sure, the process of buying that first home can be frustrating at times, but you will feel a sense of accomplishment and satisfaction when you sign the contract and get the keys to your very first place.
As a first time home buyer in Chicago, you've already made the decision to join the ranks of happy homeowners in the Windy City. So what's the next step? It's time to find that ideal house, condo, loft or townhome you can see yourself living in for years to come. Perhaps you've already been looking at Chicago listings on the Internet and found a few you like. At this point you are wondering exactly how much house you can afford. It is important for first time home buyers to get pre-approved for a loan so you know just how much you can spend AND so sellers know you are serious about purchasing a home.
Because it is your first time going through the home buying process, working with a real estate agent can be the best way to make sure you are covering all the bases. There is a lot first time home buyers need to be aware of. It doesn't hurt to have a professional on your side, and it doesn't cost anything either. An agent will help you find a lender, locate properties that fit your budget, and negotiate pricing without charging you a penny.
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