The decision to buy a home is one of the most emotional and largest financial decisions you may make. Before buying a home, it’s important to consider how such a purchase will affect your finances and your lifestyle. It makes sense to review all pros and cons of becoming a homeowner before making this big commitment.
See Also: Buy or Rent Calculator
Pros of Owning a Home
- Homes typically increase in value allowing you to build up equity.
- Costs are more stable than renting if you have a fixed-rate mortgage.
- Mortgage interest and property taxes are tax deductible.
- Pride of ownership and improving your home the way you like it.
Cons of Owning a Home
- A long-term financial commitment, typically 20 to 30 years.
- You pay for all minor (leaky faucet) and major repairs (new roof).
- More difficult to get up and move if your job requires that.
- Mortgage payments are generally higher than rent payments.
- Requires up front money such as a down payment & closing costs.
- Your home value may not increase, depending on the housing market.
Pros of Renting a Home
- Rent payments tend to be lower than a comparable house payment.
- Your rent payment may cover utility costs.
- More flexibility to get up and move since most leases are for 12 months.
- Landlord pays for all maintenance and repairs, not you.
Cons of Renting a Home
- No tax deductions for mortgage interest and property taxes.
- Your rent payments will likely increase each year.
- You don’t have the freedom/flexibility to make the home “your own.”
- Dealing with a difficult or unresponsive landlord.