As you think about and plan to buy a home, there are many factors to consider, including those related to making the best decisions for yourself and your family. Yet, it is worrisome for many people to think about buying a home. Do you have the time to devote to it? What are the costs involved in owning a home? To help you navigate this process, consider the following.

Steps to Home Ownership

As you think about buying a home, consider the basic steps you'll need to work through to do so:

• Determine why you want to buy a home, including the critical requirements a home needs, such as size, location, and features to meet your family's needs. Define the difference between needs and wants.
• Determine where you stand financially. What is your credit score?
• Could paying down your credit card debt help you improve your score to qualify for a lower-interest loan? Do you have a down payment for the loan?
• Can you handle the one-time closing costs of purchasing a home (such as loan origination fees, home inspection fees, and the like)?
• Work with a lender to determine the type of loan that best suits your needs based on down payment, credit, borrowing terms, and costs.
• Work with a real estate agent to determine your dream home and offer. Negotiate the terms of the contract with the seller.
• Once the offer on a home is accepted, work with the mortgage lender to close on it. It takes several weeks, and once complete, you'll get the keys to the home.

Move in and call it your own! That's an overview of home-buying, but what does homeownership really mean?

Understanding Home Ownership Costs

What does it cost to own a home? You may know you're making a monthly mortgage payment, but what else will you likely have to pay to buy a home?

• Property taxes depending on which state you live in.
• Homeowner's insurance.
• Private mortgage insurance.
• Homeowner association dues (HOA) in some areas.
• Ongoing maintenance, upkeep, and repairs of your home.
• Utilities for the service you need, including water, sewer, trash, electricity, gas, and others.
• Emergency repair services.
• Lawn and tree care costs.
• Appliance purchases and maintenance.

Maintaining Your Home

Once you're in your home and making it your own, you must maintain it. It helps keep the property's value high, and if you need to borrow against your home in the future or sell, you may be able to sell it for more than you purchased it for. To maintain your home, consider the following:

• Annual inspections for the roof, heating and cooling system, and major appliances.
• Keep the foundation dry and take corrective action on any issues.
• Maintain humidity levels in the home to minimize mold buildup.
• Ensure only a licensed professional handles the plumbing and electrical work.
• Keep the property clean, organized, and clutter-free to minimize liability risks.
• Work to update significant systems in the home, like the windows, flooring, and esthetics, as you can and as they need to be maintained.

Building Home Equity

You hold equity as the portion of your home's value not tied up in a mortgage. You increase your equity naturally by making regular monthly loan payments. However, to accelerate the growth of your equity, you can:

• Pay more than the required monthly mortgage payment. By doing so, a more significant portion of your payment will reduce the principal rather than just covering the interest, thus increasing your equity faster.
• Enhance the value of your home through various methods such as regular maintenance, renovations, or adding new features. Typically, well-maintained real estate has appreciated over the years.

Home Ownership and Taxes

A core component of home ownership that many don't think about is taxes. Tax rules differ from state to state, and your state's taxing authority will provide clear insight into your responsibilities.

In many states, property owners pay taxes on their property, including county taxes. These taxes are typically used to pay for roads and, in some states, to fund schools.

Also, owning a home could help to reduce some of your income taxes paid to the federal government. Mortgage interest is often tax deductible, which means you can deduct the interest you are paying on your mortgage each month against your taxes, lowering what you owe. It's best to work with a tax professional to determine if you qualify for this deduction or if the standard deduction is the better route for you.

Takeaways

• Owning a home is an exciting opportunity to create a financially strong future. Still, it comes with numerous obstacles and challenges.
• Ensure that you understand the cost of homeownership, including tax implications and how equity works.
• Consider buying a home based on your needs and financial goals. Don't rush into the purchase to own a home but rather when you're ready for the benefits it offers.