Home ownership is the American Dream, right? Owing a place to call home, being able to paint the walls purple if you like, that’s what everyone wants. Isn’t it? Let’s talk a little about the pros and cons of home ownership that will help you decide if you should buy or rent.
Benefits of Owning a Home
This might seem obvious, but there are 3 main reasons to buy a home.
- Financial Advantages: You are paying for housing one way or another. When you rent you are paying your landlord’s mortgage while his property gains value. Right now, we still see record low interest rates on home loans, so this is a great time to enter the market and start building equity.While you have to consider the market in which you’re buying, the goal is to purchase while property values are increasing so you see an ever higher rate of return. There are also tax deductions based on owning a first or second home. These should be discussed with your tax professional.
- Pride of Ownership: This in an emotional advantage. As a home owner, you control the environment in which you live. If you want those purple walls or granite countertop….you can do it. A renter does not have this kind of control and certainly it’s not desirable to spend money to improve the landlord’s property value.
- Roots: One of the main reasons that people want to own a home is to put down roots. Regardless of whether you have children, there is a natural desire to be part of a community: to have a local coffee shop, dry cleaners, bar.
Advantages of Renting a Home
As with all things, there are considerations which mean this isn’t the right time to buy a home.
- Additional Expenses: There are costs to owning a home. You are responsible for the repairs and upkeep of the property. Unexpected problems can become quite expensive if you are unprepared. Typically a mortgage will be higher in a given neighborhood than renting, so you are committing to a long term financial commitment also.
- Freedom: A renter can move from one city or state to another very easily. What if that dream job in London pops up and you own a home, it’s harder to move. You will need to sell, or perhaps rent out, your home.
- Upkeep: A home requires maintenance. Once you own a home, you might find that your weekends are spent raking leaves, painting the eaves or moving the lawn instead of wine tasting. That’s a trade-off and something to consider before purchasing a home.
There are some wonderful reasons to buy a home…..those are your reasons. Before you decide that it’s time to buy, talk with a real estate agent and talk about the market. There are also some wonderful online tools, such as an affordability calculator from Redfin. Then give some thought to your lifestyle and goals, if they are in line with the advantages of home ownership, then time to go house hunting.