Buying your first home – Step 1: Rent vs Own?

Buying your first home – Step 2: Loan Pre-Approval

February 10, 2009

Spring TX Real Estate: Market Report January 2009

February 13, 2009

This is the first post in a series designed to educate first time home buyers on the process of purchasing a home in Spring Texas.

As a potential first time home buyer, you have probably been thinking about owning your own home for some time now. You may have already been on the real estate web sites searching for homes and maybe even attended an Open House or two. But before you get too far down the path, you really need to stop and begin the process at Step 1.

Step 1 is Understanding the differences between Renting and Owning and determining if you are ready to own your first home.

Monthly Payments – If you obtain a fixed-rate mortgage your monthly payment of principal and interest will remain the same for the duration of the loan. Rental rates on the other hand fluctuate based upon what you will hear your landlord describe as “the going market rate” which translates into a monthly rent increase for you.

Real estate taxes and homeowners insurance can and do fluctuate from year to year based upon your home’s property value. So even with a fixed-rate mortgage, you can experience changes in your monthly payments due to increases in the real estate taxes and/or homeowners insurance.

Equity – When you make your monthly mortgage payment a portion of it goes toward paying down the balance of the loan and you build up equity in the home. When you make your monthly rent payment you are building up the landlord’s equity.

Price Appreciation – If the Spring Texas real estate market appreciates in value which historically over the years it has done, your home will be worth more than you paid for it. If you are renting, you do not receive any price appreciation. Your landlord receives the benefit of price appreciation.

Tax Benefits – When you own a home you may qualify for additional tax benefits beyond the standard exemption. There are no tax benefits for renters.

Costs – As a renter you do not have any additional costs beyond your rent and utilies. If an appliance breaks and needs repair, you call the landlord. If the roof springs a leak, you call the landlord to get it repaired. As a homeowner the situation is reversed. If an appliance breaks and needs repair, the money for the repair comes from you. Because as a homeowner you are your own landlord.

Freedom – When you own a home you are able to make modifications to it to be a true reflection of your personal style. When you rent you usually are not even permitted to change the color of the walls.

Rick and I both know that as a potential first time home buyer you are bound to have lots of questions about the home buying process. We want you to know we love working with first time home buyers and are available to answer all your questions. Just give us a call at 281.300.3141 or 281.804.8626.

And don’t worry if you don’t understand everything right away. We know the process of buying your first Spring Texas home can be overwhelming at times. So if you need to ask a question again, please do so. Because we want you to be confident in your decisions.

Read the entire first time home buyers series, by accessing the steps through the links below: