Are you thinking about buying a home? This is a big decision that can be exciting and very stressful at the same time. I am here to ease the tension a bit and help you decide if home ownership is right for you.
Owning a home is not for everyone, it takes a lot of time, money and energy. There are some general advantages and disadvantages to owning a home, and only you can decide what is best for you. So let’s take a closer look at the advantages and disadvantages of home ownership.
Advantages of Home Ownership
Here are some key benefits to owning your own home:
Stable Housing Costs
Forget the uncertainty about your rent payment increasing; a fixed-mortgage payment does not increase year after year (other than small increases to your homeowners insurance or property taxes).
Owning a home comes with some new tax benefits, depending on your income bracket and housing market, you may pay less income tax because all of the interest on your home loan and all of the property taxes you pay each year can be deducted from your taxable income.
Disclaimer: Be sure to consult a tax professional about eligible deductions.
Making your mortgage payment is like investing money. As you make payments and pay down the balance of your loan, you build equity. In addition, any increases in your home’s value due to sound home improvements or housing market changes will increase your equity. Equity is the difference between what your home is worth and how much you owe the bank.
Equity: This is the difference between how much your home is worth and how much you owe on your loan. For example, if your home is worth $100,000 and you owe the bank $90,000, your “equity” is $10,000.
Control Over Your Environment
Guess what, the house is yours, you can do what you want. Having a home of your own gives you the freedom to live as you wish. You can have pets and make changes to your home to suit your taste. When something breaks, you can make the repairs on your schedule and to your liking. If you make improvements wisely, they can add to the value of your home.
When you buy a home, you commit to that place and the surrounding community for some time. It is a place you can call your own. It often comes with positive feelings of being settled in one place, having pride in your home, knowing your neighbors and having a sense of belonging in your neighborhood.
Disadvantages of Home Ownership
There can also be some drawbacks to owning your own home:
When you add it all up, the sum of your house payment, utility bills and any repair costs can be more than renting.
There are no guarantees that your house will go up in value. Changes in the local economy, wear and tear on the house or other circumstances can cause the value of your home to go down.
Maintenance And Repairs
When something needs repair or upkeep, you no longer have the luxury of contacting the landlord to pay for it. When you own a home, you have to perform regular maintenance and make repairs yourself or pay someone else to do them. Don’t be lazy! You must quickly fix small problems, like loose shingles and clogged drains, or they can become bigger, more expensive problems.
When you own a home, moving is harder if you decide to live somewhere else. You often can’t move until you sell or rent your home. Selling can take several months or longer.
Sometimes homes have fewer amenities than apartments in complexes, which can come with pools, laundry rooms and playgrounds that can be used and are included with the rent.
Weigh Pros and Cons
Now that you know some advantages and disadvantages. What do you see as the pros and cons of owning your own home? Rank the pros and cons in order in each column, with 1 being most important. Then compare your lists and decide if homeownership is right for you based on what you see as the upsides and the downsides.
|Stable housing costs||Monthly Costs|
|Tax Benefits||No guarantees|
|Equity||Maintenance and repairs|
|Control over your environment||Decreased mobility|
- Based on what you answered, do you think homeownership is right for you?
- What most supports your thinking?
If it is the right time for you, read about this. If not, you might want to consider reading our financial post to work on other financial goals.