2. Am I prepared to handle my own home repairs and maintenance?
One of the nice things about renting a home is that you have a landlord to fix your leaky roof and replace the faulty water heater at no cost to you. Owning a home, on the other hand, means you're responsible for these types of repairs and maintenance yourself. And unlike the fixed expense of your mortgage payment, you never know when you might need to spend extra money on home repairs.
Another good rule of thumb for homeowners is to set aside 1% of your home's value4 each year for maintenance. For example, if you bought your home for $300,000, you should have $3,000 in the bank for unexpected repairs and ongoing maintenance.
3. Have I saved enough money for a down payment on a home?
Even though a mortgage can take a major purchase like a home and spread the payments out over time so they're affordable, there's still a significant investment required up front. It's a good idea to have a down payment of at least 5% to 10%. If you can put down 20%, though, then you can skip paying private mortgage insurance (PMI); otherwise, you'll have to pay for PMI as part of your monthly mortgage payment until you've reached 20% equity in your home.
4. Do I understand the tax implications of owning a home?
As mentioned, there are tax benefits to owning a home, including the ability to deduct certain expenses from your taxable income.5 Unfortunately, you're also required to pay taxes on your home. Property taxes,6 which are calculated as a percentage of your home's value, will vary depending on where you live.
Clearly, the decision to rent or buy a home depends on many factors. There's no cookie cutter answer that works for everyone. You'll have to evaluate your financial situation, lifestyle, and goals to decide what's right for you. But to make the decision easier, you can use this great rent versus own calculator to crunch the numbers and figure out if owning or renting a home is better for your situation.
If you're in the market for a new home, check out our free Mortgage Basics eBook. And if you have specific questions about whether you're ready to purchase a home, you can always speak with one of our Synovus Mortgage Specialists. Just click here to find one near you.