Sometimes renting is the better option, but most often home ownership offers a lot more advantages and benefits. Owning your own home has many benefits for both the owner and the community, including improved education, lower teen pregnancy rates, and a higher lifetime income. Besides these, here are some additional advantages of owning a home. In this article we have shared some advantages and disadvantages of buying a home.
1) More Stable Housing Costs
The rent payment can be unpredictable and typically rises each year, but the mortgage payment stays the same throughout the loan term. If taxes increase, the increase is usually gradual. Stable housing costs are especially important during inflationary times, when renters lose money and owners gain money.
2) Tax Savings
Homeowners may be able to save significant amounts of tax because mortgage interest and property taxes can be deducted from federal income tax, as well as from most state income taxes. This can be a significant amount at first, because the first few years of mortgage payments are mostly interest and taxes.
If you need to refinance to consolidate other debts (an opportunity you don’t have if you are renting) the interest on this is also tax deductible.
3) Equity
Instead of payments going into another’s pocket, home owners are building equity in their own homes. Often, this is one of a person’s biggest investments. You pay more toward the principal each year you own the home, which is money you will recoup when you sell it. The longer you have it, the faster it grows like a scheduled savings account. You have money in your pocket if the property appreciates, and generally it does. You are the one who benefits from that, not the landlord. You can then use this equity to plan for future goals like your child’s education or your retirement.
4) It is Yours!
When you own a home you are in control. You the freedom to decorate it and landscape it any way you wish. You can have a pet or two. No one can pop in and inspect your home and threaten to evict you.
Even young people, like college students out on their own, can often benefit from home ownership. It puts them ahead of other young people their age financially by helping with their credit and giving them what is often an excellent investment. Often a college student buying a home will rent the rooms out, and his or her roommates end up making the payments for the house. When the student is ready to move on, her or she can sell the home (hopefully making a profit) or keep it as an investment and continue to rent it.
Buying a home is an important decision. It is often the largest purchase a person makes in his or her life. Home ownership also comes with some increased responsibilities, and isn’t for everyone.
There are some disadvantages to home ownership that you should take into account.
1) Increased Expenses
Your monthly expenses may increase, depending on your situation. Even if the monthly payments are the same, home owners still have to pay property taxes, all the utilities, and all the maintenance and upkeep costs for the home. Often you need to supply appliances that were furnished with a rental.
2) Decreased Freedom of Mobility
Homeowners can’t move as easily as a renter who just has to give notice to the landlord. Selling a house can be a complex and time consuming process.
3) Risk of Depreciation
In some areas with overinflated prices, there may be a risk that the house will depreciate instead of increase in value, if the prices go down. If you then sell the house, you may not get enough money from the home to pay back your mortgage, and you will still owe the mortgage company money.
4) Possibility of Foreclosure
If for some reason you are unable to make your payments, you risk having the lender foreclose on your property. This can result in the loss of your home, any equity you have earned, and the loss of your good credit rating.
When considering home ownership, you need to weight the advantages and disadvantages for yourself. If you are like most people, you will find that home ownership is worth the risks and disadvantages.
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