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What Are The Pros And Cons Of Owning A Home?

InCharge Institute of America, Inc.

Most people consider buying a home at some point in their lives, while others prefer or choose to remain renters. Renters enjoy the worry-free aspects of renting and don't have the responsibilities that go along with owning a home. Others don't pursue home ownership because they're not sure if they can afford it.

Well, times have changed. It is now possible to purchase a home with as little as three percent down – and sometimes zero down. Here are some of the pros and cons of owning a home:

Advantages of Owning a Home

  • When you carefully choose a house you can afford, the outcome can be significant: By paying your mortgage, you are building equity in a place of your own. Equity is the portion of the property that you actually own. Equity increases by paying your monthly payments, and your home may also appreciate in value over time.
  • Tax Advantages: As a homeowner, you can deduct on your federal and state income taxes the amount of mortgage interest and real estate taxes you pay each year if you itemize deductions.
  • Once an owner, always an owner: A first home often leads to a better second home. Owning and properly maintaining the property also offers a sense of accomplishment.
  • Retirement Savings: Long-term home ownership can provide beneficial retirement security through the growth of equity.

Disadvantages of Owning a Home

  • There are no guarantees: Even if you work hard at maintaining your home, property values can drop, depending on the neighborhood in which you live. This is why it's important to choose a house and neighborhood that have strengthening value in the real estate market.
  • Being a homeowner is usually more costly than renting: Mortgage payments are generally higher than rent, and include the added costs of home repairs and maintenance. As an owner, you must pay for any unexpected costs such as a new roof or heating system. This is why a family budget and a savings strategy are important.
  • Financial trouble from illness or loss of a job: When you own a home and fail to keep up with your mortgage payments, the mortgage lender could call the loan, which means payment in full or foreclose on the mortgage. This could result in the loss of your home as well as the equity you've built. A renter, on the other hand, can downsize to a cheaper apartment to cut expenses.
  • Owning a home usually makes moving difficult and complicated: After you purchase a home, you may not have as much flexibility in choosing a new location to live or work.

Finally, here are the steps involved in the path to owning a home:

  • Determine whether you want to rent or buy.
  • Determine a price you can afford.
  • Choose the kind of home you desire.
  • Begin pre-qualification.
  • Begin the house hunt/select a home.
  • Apply for a mortgage.
  • Inspect the house/personal checklist.
  • Make an offer.
  • Get a professional inspection.
  • Close the loan.
  • Move in.