Pros and Cons of Buying a Home
UPDATED: June 19, 2018
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Many people, at some point in their lives, consider purchasing rather than renting a home. Others have no desire for home ownership based on their life styles.
Pride of Home Ownership
Owning a home can give the homeowner a sense of pride and freedom not experienced as a renter. The homeowner has no landlord or rent payments which can increase every year. The buyer can maintain his home according to his/her wishes, enjoy pet ownership if desired, and relax in his/her own yard. Many first time homeowners first acquire a condominium and then sell it if they get married and start raising a family, having the need for more space or a location closer to schools. Owning your own home and maintaining or improving it gives the property owner a sense of accomplishment and pride of ownership.
Unlike the uncertainty of rental increases, the buyer's mortgage payments remain constant. Over time, equity is built up by the payments and appreciation of the home's value. Equity in a home is the actual value of the home owned beyond the amount due on the mortgage.
Home Ownership Tax Advantages
In addition to pride of ownership and building up equity in your home, the homeowner has tax advantages that do not come with renting. The homeowner can deduct the property taxes on federal and state tax returns as well as the interest paid on the mortgage.
Home Ownership Stability
A significant advantage of home ownership is a sense of stability for the property owner and his or her family. By owning as opposed to renting a home, the chances of uprooting and moving are greatly reduced. As one suspects, moving repeatedly is a stressful experience and especially difficult for a family.
High Costs of Home Ownership
The homeowner has sought relief from high rents by home ownership. However, the owner is now responsible for property taxes and monthly mortgage payments. Furthermore, utilities for the home and maintenance costs must also be paid for the privilege of home ownership. As a renter you are not typically responsible for any repairs resulting from a natural disaster or the need to maintain and repair unlike the homeowner. The homeowner is now required to pay for any unexpected costs such as a new stove, refrigerator, or roof.
A significant disadvantage of home ownership is the present decline in property values in parts of this country. The homeowner who bought his or her dream home four or five years ago has discovered s/he owes more on the property than what it is currently worth, due to the economic recession. Property values have significantly declined where many homeowners now owe more to their lender on their mortgage than what the home is worth. As a result, there is little incentive for many property owners to continue making mortgage payments that exceed the home’s value. The result is that many homeowners simply walk away from their homes because they can no longer afford to pay its monthly expenses. A foreclosure, meaning a sale by the lender, would occur once the homeowner stops making the monthly mortgage payments. S/he then loses his home and his investment built up over time.
Home Ownership Impairment of Mobility
Another disadvantage of home ownership is the inability to easily move out of the area for other opportunities such as a better job. Though your home provides stability, it also impairs mobility. You cannot just pack up and go. The homeowner must consider the financial consequences of a quick sale, which may not be that quick, to be closer to that perfect job opportunity.
Ongoing Commitment to Maintenance
The homeowner must understand that maintaining and repairing a home is an endless part of home ownership. This responsibility is not only costly, but can take up considerable and unanticipated time.
After factoring in the pros and cons of homeownership, the person considering a home purchase will hopefully make the decision best for his circumstances.