Buying A Home For The Right Reasons
Buying a home is generally considered to be necessary to establish a good financial course in life
. Purchasing and owning a home is the cornerstone of good financial planning as it acts as both a place to live and an appreciating investment. While it is possible to buy a home in a less than perfect market, when prices are at an all-time high, there are really only two mistakes when buying a home. Firstly, if you purchase a home with substantial structural faults this can lead to financial disaster. This is not to say a home that needs a little TLC and priced to reflect that requirement is not a good purchase this scenario affords the possibility of return on sweat equity. Secondly, if you buy a home that is simply more home than you can afford, this will also lead to financial ruin and the likelihood that you will lose the house, your credit rating and whatever equity you put into the purchase. So keep these points in mind have your potential home purchase inspected by a builder for structural defects and make sure that you are buying within budget and that you have a contingency plan in place should financial problems happen.It has been suggested by some that while no one can argue with the fact that it is better to be paying into home ownership (a mortgage) than paying anothers mortgage (rent), that homes do not always appreciate in value. Please show me where over sufficient time a property has not appreciated. Real estate is in limited supply. There is only so much available and as the world becomes a more populous place with more of the worlds population looking for a higher standard of living the pressure on the available land will only increase and of course the prices with that. Land should not be compared to the stock market where value is very subjective and very speculative but on a valuable resource. Real estate investment, if it can be compared to any other type of investment is more like an investment in gold.
There are many good reasons to buy a home:.
not paying tax on capital gain up to limits prescribed by law
building equity as mortgage is paid down
appreciation of your investment.
full control of your home.
These represent the building blocks of the good life. Home Ownership provides a chance to more fully control your living environment. You can renovate, landscape, and decorate any way that you choose. While enjoying these freedoms you are building equity in the property through a combination of paying down the amount you borrowed and the natural appreciation of real estate.
Are there downsides to real estate investment and are there people who should, at least in certain times, refrain from purchasing real estate? The answer to these questions is yes in limited cases and situations. The main criterion that must be met to make money from real estate is the ability to hold it for at least 5 years. If you will be forced to move due to family obligations, job transfers, or other reason before that time then you would be wise to delay home ownership. If your financial situation leaves you wondering if you will be able to make payments then this also casts doubt on the wisdom of home ownershipas an option for you at this time. However in this market there are great real estate opportunities and a financially stable individual might do well to have a look at these.
Here on PEI there are excellent opportunities for investment in PEI real estate in a market that did not take as string a hit in the financial crisis as many. Our market is more stable and less subject to major swings. While it is true that you will not flip a property for a fast dollar, there are steady, stable gains to be made in the market on PEI.
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