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4 Reasons to Own your Home
The most common complaint when renting is, “I pay my landlord’s mortgage payment and pay nothing to myself”. Renting has its purpose, but the cost of renting will rise every year. Rather, when you own, your fix your housing expense AND build equity on the overall value of the home over time. Everyone needs a place to live. You should own that value for future use such as paying off debt, send a child to college, or possibly start a business.
Consider when you rent, you are losing money at every move. There are security deposits (which you may or may not get back), pet deposits, non-refundable fees, moving expenses, and almost always expenses for new furniture. When you own your home, it becomes YOURS and you can do what you want without the worry of losing your deposit. Each time you move, you lose $1500 - $5000 just on expenses alone. Move one time, and let the house pay for itself with the equity you build.
When you purchase a home with a fixed-rate mortgage, you lock your monthly principle and interest payments for a specified term of 15 or 30 years. Property taxes & homeowner’s insurance may fluctuate, but the bulk of your housing payment is fixed. Imagine when you want to renew your lease and the landlord charges an additional $200 to renew. Over several years, that increase adds up and will eventually force you to move, beginning the cycle all over again of moving.
Financial benefits aside, owning a home gives a sense of pride and fulfillment for things we provide for our families. Watching our children grow up in a neighborhood and making friends or meeting new people and becoming active in a community are just some of the things that come with owning a home. There is a sense of security for the things that matter most and our relationships expand and grow for the better.
What are considered closing & settlement costs?
These are costs that can include some form of origination or processing fees. They pay for the bank to work on a loan file. Included will be any discount points being used to buy down the interest rate along with the appraisal fee.
Most loans have an “Escrow Account” which collects and holds funds on your behalf to pay for property taxes and homeowner’s insurance premiums when they come due. Not all loans require an escrow account, but the borrower is responsible for paying their property taxes and homeowner’s insurance on time. A special agreement is signed at closing for an escrow account and pro-rated amounts are collected to ensure enough is available by the time these payments are due.
These are fees associated with completing the purchase of your home. Title is often where the Buyers and Sellers sign all the final closing documents to transfer ownership. Title acts as a disinterested third party in the process. They charge to process the final phase of the buying process and disburse closing proceeds accordingly.
In Arizona, typically this fee is a recording fee with the County.
Every mortgage transaction requires pre-payment of certain costs depending on your loan set up. You will pay pro-rated interest upfront for the loan and your first year of homeowner’s insurance. In addition, if paying upfront mortgage insurance or a funding fee (VA & USDA loans), those costs apply here.
If buying a home with a Homeowner’s Association or including a Home Warranty in the purchase of your home, you will include those costs here. This is anything extra that you are purchasing in conjunction with the mortgage loan that must be paid at settlement.