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What are the advantages and disadvantages of owning a home?

Home » Real Estate » Should I Rent or Buy a Home? » What are the advantages and disadvantages of owning a home?

When you're choosing to rent or buy a house, it's important to evaluate the pros and cons of both options.

If you are thinking about buying a house, consider the following advantages:
• A house is a form of forced savings
• Owning a home will give you a sense of pride and status
• Homeowners usually have a better credit rating
• Mortgage payments contribute to an investment, particularly if the property is located where it increases in value over a period of years.
• Monthly payments remain relatively constant for many years, thus housing costs are stabilized because present and future costs can be estimated and planned
• Interest on mortgage monies and taxes are legitimate income tax deductions
• The house may increase in value, resulting in a significant gain in net worth
• Ownership may contribute to security, especially in retirement years when income normally decreases
• A homeowner can borrow against his/her equity, as the value of the house increases against what is owed on it
• More space may be available for family members and their activities
• A homeowner has freedom to make improvements and changes to the house and surroundings as desired
• Home ownership can contribute to the general well-being and sense of "roots" of the family, especially for children
• Homeowners generally are concerned about community affairs and how they may affect their property

The disadvantages of home ownership may outweigh the advantages for some people:
• A substantial down payment is needed.
• A house requires a big commitment in time, emotions, and money
• The house may decrease in value if the neighborhood deteriorates or changes quickly; thus resale may be a problem
• The homeowner may have limited money for other purchases or activities since his or her money is tied up in the house
• Maintenance and repairs may be costly and take a great deal of time and effort
• Owning a house requires money for insurance, and a loss of the house as a result of a natural disaster could mean a serious financial burden
• Some families have difficulty budgeting for maintenance, repairs, home improvements, and/or home ownership dues
• Real property taxes could increase dramatically
• Total housing costs may take too much of the budget, resulting in potential cash flow problems
• The family may have higher moving-in costs as new items may have to be purchased for a house
• The family may feel less secure if neighbors are not near
• The house may be too large after children leave home
• Security may be a problem if you travel a lot
• Unexpected loss of income due to job termination or unemployment may limit money available for home ownership costs

Next Page: How do I decide which is best for me?

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