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Almost everyone wants to have his own home. But are you able to afford the house and all of the expenses associated with it?
A house is the most expensive purchase in our life. In this article, we’ll see the positive and negative sides of homeownership. We’ll show you exactly how you should calculate how much you can afford to spend on a house.

Should you buy or rent a house?
Having your own home is a base of the American dream, but there are pros and cons to it. We help you decide should you buy or rent a home.

Emotions, family and personal reasons all play an important role in any home buying decision.
You don’t know what the future holds for you, your family, your job or your finances. But we’ll help you understand what you’re going to know when you are going to have you own home.
When you get that exhort to buy a house, the first thing to do is step back and think whether it makes more sense to keep renting for a while. If you still want to buy, you need to understand how much house you can afford.

Economic distinctions between renting and owning
If you’re expecting the best return on your money, historically you’re better off investing in the stock market than buying a house. Primary homes basically don’t reach the investment return of financial instruments such as mutual funds. While the stock market’s long-term usual rate of return is in the range of 8 percent to 10 percent, housing historically has valued on average in the low- to mid-single digits. Don’t buy only for investment gain.

But, Uncle Sam helps out by letting taxpayers deduct part of the mortgage interest and real estate taxes every year. That, who borrow get the profit only if they pay enough in one year to exceed the standard deduction. But often happens, especially during the first few years of a mortgage, when most of each outlay goes toward interest rather than principal.

Positive side of homeownership
Owners enjoy some benefits, too. They build equity over time as house values rise and their mortgage balances decrease. Besides they don’t have to think about their housing costs shooting through the roof, because lenders can’t boost borrowers’ rates and payments unless those borrowers have adjustable-rate mortgages.

Negative side of homeownership
When something breaks at an apartment, it’s the homeowner’s problem. When it’s you – the problem is yours. When you throw every dollar into a down payment, you’re taking a big risk because you may not have enough money left to buy a new air conditioner or fix leaky pipes.

Potential buyers might want to hold off for some other reasons. If you have a good chance to be laid off soon, you might want to wait. The same goes for people planning to leave a job soon. The payment for the month isn’t the only obstacle for this kind of customer. Closing costs and other home buying fees, like the commission that most owners end up paying to real estate agents when they sell their houses, add up. Those who have to sell after living in one place for only a short time can end up in the hole on their investments.

Exam all the options
Some middle-ground approaches to homeownership mix elements of buying and renting. Some popular loan types are seller financing, “lease with an option to buy” and “contract for a deed” plans.

Seller financing
With seller financing, the seller aid the client in buying the home by “lending” the buyer either a portion of the amount to be financed or the entire amount.

For example the buyer and seller agree on a price of $150,000 for the house. In many cases it means that a lending institution would require a 20 percent down payment — $30,000 — and give the buyer a mortgage for $120,000. In case the buyer has only $15,000 cash, the seller could “take back” a second mortgage for the $15,000 the buyer is short. The buyer makes payments to the bank on the first loan and to the seller on the second loan.

One more example of seller financing: When the sale price of the home is $150,000 and the buyer has $15,000 for a down payment, the buyer gives the $15,000 down payment straight t to the seller, who agrees to carry the entire mortgage amount of $135,000. All payments are made by the buyer straight to the seller.

Pro: Seller financing reduces the cash needed to get into a home and could dramatically reduce closing costs. Often the seller will be more flexible in accepting an underqualified buyer.

Con: The seller determines the interest rate for that portion of the mortgage being carried, and it usually comes with a higher rate and a shorter term. Perhaps most importantly, it very often comes with a balloon payment. This means that monthly payments would be computed as though the mortgage was to continue for, say, 30 years, but at the end of five or 10 years the entire remaining balance has to be paid in one lump sum. That normally requires refinancing at that point, when rates could either be lower, higher or about the same, or selling the house to meet that balloon payment.