Many people believe that owning a home is the cornerstone of living the American dream. For many others, it can be their worst nightmare. For obvious reasons, purchasing a home is likely going to be the most significant financial decision you will ever make. So before you decide to commit to this substantial economic undertaking in your life, you should carefully weigh the pros and cons of owning a home.
Start by asking yourself a few vital questions. These include the following.
- Do I really need a home?
- Will this affect my income positively?
- Will I stay inside the home to justify the purchase?
- Do I have enough money saved?
- Am I ready to commit to mortgage payments?
Pros and Cons of Owning a Home
Let’s take a closer review of the advantages and disadvantages of owning a house to help you get started.
- You will get unmatched privacy. There will be no more landlord inspections of the place where you live.
- Real estate typically increases in value over time relative to the dollar.
- You no longer have to factor in periodic cost increases such as rent, as long as you’ve purchased the house with a fixed-rate mortgage.
- It is a matter of pride to own your very own home.
- Customize the house to your liking.
- Build up equity over a long period of time.
- There are no lease rules for you to follow.
- Once mortgages are paid off, you won’t have to concern your budget with monthly housing payments.
- Before your home can truly become free and clear of liens, you will have to bear an extremely long term financial commitment.
- Failure to pay the mortgage can result in property seizure through foreclosure proceedings.
- There are many ‘hidden’ costs of homeownership, such as repairs, insurance, and taxes.
- Your living standard could take quite a hit. Your new mortgage payments should be at a fixed rate, but they may be higher than rent payments if you were unable to buy with a large downpayment.
- You will need to foot the cost of a downpayment, moving expenses, and some of the closing costs.
- It is possible for the value of your house to not increase at all in the first few years.
- If you buy a house with a first-time homebuyer program through the FHA, the less money you put down, the higher your PMI (Private Mortgage Insurance) payment will be.
Why you shouldn’t buy a house
- It is very common to get pressured into making major financial decisions; this is especially true if you’ve reached a certain age or started a family. Don’t let other people rope you into something to which you’re not ready to commit.
- Often, people assume that qualifying for a mortgage is the definitive sign that they’re ready to own a home. What they don’t take into account are the spending issues and debt they will get themselves into once before they buy a home. The last thing you need is to fall headfirst into a mess without setting up a realistic budget for yourself.
- If you already have a large amount of debt, you should not set yourself up for even more before settling past dues. You don’t want massive interest rates to damage your financial health and credit. If any unforeseen situation negatively affects your income; it could prevent you from paying your mortgage. It’s a lose-lose situation.
Consider consulting with an experienced real estate professional to get a more personalized assessment if you’re serious about determining how the pros and cons of owning a home impact you specifically. Contact us today, and we can help you to evaluate if it’s the right time for you to buy a home.