I am currently on the market to buy a home and almost every time I tell someone that, they ask if I am planning on living in the area for a long time. It seems that it is the general assumption that if you purchase a home then you have to live there for years to come. I really don’t believe this is true. I am a big proponent of owning as opposed to renting because if I am going to make monthly payments for housing, I might as well be contributing to building equity in my own home.

I fully understand that not everyone has the means of owning a home. It is tough enough to save up enough money for a down payment, but I think many people count themselves out of owning a home before even considering it as an option. With a little research, one would find that with an FHA loan, only a 3.5% down payment is required in comparison with the typical 20% for a traditional mortgage. I believe that if the buyer does not purchase a home that is too expensive for them, then the monthly expenses of owning the home would only be marginally more than the average rental of the same size. Essentially, the monthly payments that previously would have gone to rent, could invested in the home. Also, many people do not consider the huge tax shelter that owning the property would provide. Individuals can deduct all the interest paid on the mortgage in their annual taxes and can significantly reduce their taxable income each year. Furthermore, for this year only, the government is offering a first time homebuyer’s tax credit of $8,000, which you do not have to pay back. This is essentially $8,000 in your pocket! With today’s depressed prices in real estate, low mortgage rates, FHA loans, and tax benefits it actually makes a lot of sense to consider home ownership.

Some people argue that buying a home in a certain area forces you to stay there for a number of years. To some degree this is true. It would not make sense to buy a home in an area and then try to sell it again in a short amount of time, especially if you are still trying to pay down the mortgage and build equity in the property. This is where the selection of the property is important. If you select a home in an area that has a strong rental history and there is high demand to rent the property, you should not have to continue living in the area if you should choose to move. All you would have to do is to rent it out so that the monthly rent covers the monthly expenses of owning the property. This way you can move and rent an apartment somewhere else and still end up paying what you were paying before, assuming the cost of living is similar. In order for this to work, you would also need to select a home that has monthly costs that are similar to the average rent charged in the area.

I think that homes can be a great investment. I do plan on staying in my city for a few years, but definitely not for too long as I’m too young to settle down and still would like to live in other places. However, I do think it would be an oversight for me not to buy a home. It could be a great investment, especially since the city I live in has a very strong rental history. The money that I spend on rent every month is basically going to waste, but if I could spend close to the same amount in mortgage payments and consider it an investment, I could take big steps in building my net worth.

Do you think buying a home is an option for you? Was there anything mentioned in this post that you would like to know more about? Please feel free to comment.