PROS AND CONS:
The decision to buy a home is a big one and should not be made lightly. If you are
planning to buy a home, you probably have good reasons in mind, ranging from the purely
personal to the very practical. But homeownership is not for everyone. There
are many good reasons for becoming a homeowner, provided you are ready for the increased
responsibilities that come with it.
Advantages of Homeownership
If you are planning to buy a home, you probably have
good reasons in mind. Some of the major advantages are described below.
A Place to
Call Your Own
Your home is your castle. Perhaps you
are ready to settle down in your community and want to have the feeling of permanence and
involvement that comes with owning your own home. Maybe you need more space for your
family. Or maybe you want more freedom than you currently have as a renter to change your
home to suit your individual taste and needs.
Owning your own home can offer a number of financial
advantages, some of which are noted below.
When you are a homeowner, your monthly mortgage
payments serve as a type of savings plan. Over time you will accumulate what lenders call
equity, an ownership interest in your house that you may be able to borrow
against or convert to cash by selling the house. On the other hand, renters continually
pay rent to a landlord for as long as they rent without the opportunity to build up
While rents typically increase year after year, the
principal and interest portion of most mortgage payments remains unchanged for the entire
repayment period. Because of the effect of inflation, you pay the same amount with ever
Houses typically increase in value over time. It's
not unusual for a house that sold fifteen years ago to be valued at much more than its
selling price today. This increased value is as good as money in the bank to the
Homeowners are eligible for significant tax
advantages that are not available to renters. Most important, the interest paid on your
home mortgage usually is tax deductible and therefore can save you a substantial amount
each year in federal income taxes.
Possible Drawbacks of Homeownership
Owning a home requires a significant investment in
time, energy, and money. You don't want to overextend yourself to the point that you don't
have a penny to spare for anything else. Below are some possible drawbacks of
homeownership for you to consider.
Usually you can expect to pay more for housing as a
homeowner than you did as a renter, especially for the first few years. Even if your
mortgage payments are less than your previous rent payments, as a homeowner you must also
pay property taxes, homeowner's insurance, all utilities, and upkeep expenses.
As a homeowner you cannot move as easily as a renter
by simply giving the required notice to the landlord. If you anticipate moving to a new
location within the next year or two, this might not be the ideal time to buy a house.
Dont forget that responsibilities such as
mowing the lawn and taking care of needed repairs come along with homeownership. Actually,
the promise of getting the advantages of homeownership without the accompanying repair and
maintenance responsibilities is a major factor in the popularity of condominiums.
If you fail to keep up your payments, the lender may
sell the mortgaged property. This is called foreclosure and can result in the loss of not
only your house but also your investment and good credit rating.