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web exclusiveIn House Advice

 
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When financial experts make lists of common mistakes made by divorced women, the house usually makes an appearance in some form or another.

Certified financial planner Ginita Wall, co-founder of Women’s Institute for Financial Education, a non-profit organization that provides education to women in their quest for financial independence, says many women fight for the home only to discover they lack the cash flow to pay for it. On average, a woman’s standard of living decreases by 27 percent after divorce. To ensure you make a decision that fits your mental and financial well being, consider these domestic details.

PROS of home ownership
Smart investment
Borrowing to invest in a house that you plan to live in is safe and can be profitable. If your house appreciates in value, your initial investment can yield very high results. Even if your house depreciates in value, as long as you continue to live there, you won’t lose money. Despite today’s volatile housing market, most houses appreciate over a long period of time. For example, if you buy a house for $150,000, after 10 years it will be worth $182,849, according to the U.S. Department of Housing and Human Development.

Steady mortgage payments
While rents normally increase by five percent annually, the principal and interest portions of  “fixed-rate” mortgage payments remain the same throughout the period that you repay the loan (15 to 30 years typically). That means after about six years, the homeowner’s monthly mortgage will be less than the renter’s monthly rent. 

Equity
In terms of real estate, equity refers to the stake of ownership you have in the house. For instance, if you’ve paid off $20,000 for a $200,000 house, you have 10 percent equity or ownership, of the house. You can take out home-equity loans from your lender up to the amount of your equity (the current value of your house minus the amount that you owe).

CONS of home ownership
Limits investment options
Buying a house is not the only way to invest, and in many cases, investing in stocks, bonds, mutual funds, futures, derivatives, and T-bills can yield better returns. 

Potential risks
If you speculate and buy houses as an investment rather than as a place to live, you risk losing a great deal of money, because, especially in the short-term, housing prices can fluctuate. Or if you buy a house with the intention of living in it and the value decreases, you can also lose money.

Vagabonds beware
If you plan to move soon, it makes more sense to rent than buy, because it takes time for your house to appreciate in value. You could get lucky and make a lot of money, or, just as likely, your house could depreciate in value and you could lose big as well. Most real-estate experts suggest that buying a home makes sense if you plan to live for at least two years in it.

Foreclosure
RealtyTrac, which monitors foreclosure activity, reported that U.S. foreclosure filings hit a record 342,038 properties in April. As anyone who watches the news knows, home foreclosures continue to remain a frequent reality in today’s market. For those navigating a newly reduced income and building a new life, it may be safer to rent.

Extra Responsibilities
When you’re a homeowner, you are responsible for all maintenance and repairs of the house. Depending on how large the house is and what shape it’s in, these tasks can be daunting.
 
 
 
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