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Pros and Cons of Homeownershp

Crystal Rem's picture

Rates are at historic lows, but how do I know if now is the right time to become a homeowner?

If you have good credit, and little debt, you may be thinking about grabbing up one of those low interest rates and joining the world of homeownership. Before you do, make sure you spend some time weighing the pros and cons of homeownership.

Pros

Pride. Let’s face it, it feels good to own something you have worked hard for. And owning your home has long been a symbol of independence and “making it.” You just can’t beat the feeling of pride that wells up inside you when you buy your first home.

Investment. Owning a home can also be a good investment, as homes tend to appreciate in value which means it will end up being worth more than you paid for it, unlike purchasing a car, which loses value the minute you drive it off the lot.

Tax Deduction. Buying a home can help lower your tax bill. In fact, it is often the primary reason people purchase a home. Things like interest and property taxes, private mortgage insurance premiums are tax deductible. You can find more information on what the tax breaks are here.

Inflation protection. Since homes generally increase or maintain their value, buying a home is a great hedge against inflation. Check out this article for more information about how inflation works.

Boosting Credit Score. As long as you stay current on your mortgage, having a mortgage loan can improve your credit score. Learn why here.

Improvements. When you own the home, it is yours do to with as you see fit, which means you can remodel or change it to be exactly how you want it; no permission requests have to be made in order to plant a vegetable garden or replace an ugly door.

Flexibility. Want to get a dog? A cat? Both? No problem. When you own the house, you make the rules!

Cons

Responsibility. Owning a home means the buck stops with you – you are responsible for it. From mortgage payments, to property taxes, to utilities and pest control – it’s all yours. Here’s a great article on just what to expect.

Risk. If you have to sell at the wrong time, you could end up losing money. Here are 3 financial risks to consider when buying a home.

Down payment. When applying for a mortgage loan, you are expected to already have a substantial down payment. Not sure what you need? There are lots of calculators out there to help.

Inflexibility. Obnoxious neighbors? Changing jobs? You can’t just give notice and move out in 30 days…you will have to sell the house which can take a long time if you want your asking price.

Credit challenges. If you have poor or no credit history, you may not qualify for those low rates you see. Check out our previous blog about how your credit score affects your loan to learn more.

Maintenance and repair. Shattered window? Cracked driveway? Broken water heater? You can’t call the landlord for this one – It’s ALL yours, and that includes the problems.

Lack of amenities. Unless you are buying an estate, you will be giving up amenities like open spaces, swimming pools, and gyms, which may have been included in your rental or lease.

When all is said and done, it really comes down to two things: What is important to you and what you can afford. Stay tuned next week for our final post: How to Budget for your 1st Home!