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THE TRUE COST OF

HOME OWNERSHIP

Are you ready to buy a home?

You picked up this guide hoping to learn something useful about home
buying — but are you sure you are ready?

The thought of owning your own home is very tempting — instead of giving
your hard-earned money to your landlord each month, you’ll be paying off
your own home and building up equity.

Home equity is the value of the home that belongs to you. When you begin
a mortgage with a down payment of 20%, you really own 20% of the house;
the rest belongs to the lender. Over the life of the loan, as you pay back more
of the principal, your home equity — your ownership stake — increases. This
allows you to take out loans in the future using your home equity as collateral.
Many people rely on their home equity to provide for their retirement, or to
take a loan to pay for such as large future expenses such as weddings or
college tuitions.

But if you’re thinking of your house as an investment, it’s also wise to consider
alternative possibilities of using your money. While building home equity is
generally considered a safe investment and makes up the largest share of
most people’s net worth, some people will be better served by continuing to
rent while investing their money.
Before making the decision to invest in a home, make sure you consider
whether this decision will be a wise financial move for your family at this point
in time. Be aware of all relevant costs besides the purchase price of the home;
research property taxes, closing costs, insurance, and maintenance costs.

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