Times have changed on the homeowner?s front. The myths of homeownership that were probably always around to at least an extent are now something you should really take into consideration.
Myth #1-A home will always appreciate.
Your home may or may not be a good investment but the fact is that you have to live somewhere.
Myth #2-You can get a tax reduction.
This is true. You will get a tax reduction. But you will also have the maintenance costs associated with homeownership, which may or may not even out the benefit of the deduction. Water heater goes out and you?re a homeowner, you?re buying a new water heater. As a renter, you?re calling someone else to buy a new water heater. And the same goes for all of the other maintenance items. Remember, roofs can be expensive to replace. So run the numbers. On an older house that will require more maintenance the tax deduction may not be as beneficial.
Myth #3- I?m building equity.
Not always. See myth #1.
Also, in the first years of a mortgage you are paying almost all interest with a couple of dollars towards the principal. You have to stay a few years in order to start paying more towards your principal. And again, as we have all learned, you can?t depend upon a rising real estate market to create equity. Those days seem to be gone for a while at least. It may be a long time before home prices start rising again.
Myth #4- Renting is throwing money away.
Not necessarily. Especially if you?re not there for the long haul, and especially when prices are not on the increase. And again you have to live somewhere.
So of course, there are benefits to homeownership that are more intangible, such as building a family home, owning something wonderful, establishing your place but know what you?re getting and don?t buy into the myths