Homeownership – The Decision To Buy


The first step in buying a house is to make the actual decision to buy.  This might seem obvious but purchasing a property is a big decision and the pros and cons of purchasing need to be thoroughly examined by the buyer before taking the plunge.  Buyers that really take the time to examine whether or not homeownership will be advantageous to their lifestyle and financial position are less likely to experience “Buyer’s Remorse” than those that rush into homeownership without really thinking it through.  Some of the advantages of homeownership are as follows:

  1. Investment:  As mentioned above, owning a home is typically the largest investment that most people make during the course of their lives.  The ability for a home to appreciate in value, thus creating “Equity”, is a huge advantage to homeownership.  Renting will never give a person an opportunity to earn money for just living in a property.
  2. The investment aspect of homeownership is probably the single largest reason to own a home.Income Tax Savings:  Another great advantage of homeownership is the mortgage interest tax deduction.  For those homeowners that decide to itemize their deductions on their Federal Income Tax Return, the interest paid on mortgages for a primary residence can often be deducted.  The amount of money that homeowners save through this deduction depends on the amount of the homeowner’s annual income with homeowners having higher incomes tending to save more.  Potential Buyers should speak with an accountant or CPA to determine how much homeownership will benefit them on their taxes.
  3. Savings:  When a person pays rent the money that they pay goes on where except to the landlord.  When a person becomes a homeowner, providing they acquire a principal and interest loan, a portion of their payment every month goes toward paying down the principal on their loan resulting in a kind of forced savings account.  In other words, homeowners are making their monthly mortgage payments work for them.  They are no longer “throwing money away” each month.
  4. Emotional:  Homeownership is the America Dream and carries a tremendous sense of pride and satisfaction.  Unlike renters, homeowners own their property which means their home becomes their “castle”.  Homeowners can do whatever they want (within the confines of an HOA if one exists) to their property without having to worry about whether or not their landlord will approve.  Any modifications or enhancements to a homeowner’s home are directly for the benefit of the homeowner and not for the eventual benefit of the landlord.
  5. Consistent Monthly Payment: Providing that a homeowner obtains a fixed principal and interest loan the monthly payments for their home will be consistent without fear of increases.  When renting, there is always the possibility that the landlord will raise the rent after the expiration of the current lease.  Homeownership can provide a consistent expectation of living costs.

Some of the disadvantages of homeownership are as follows:

  1. Lack of Freedom to Move Around:  Renters have the freedom at the end of their lease to move to a different location.  Someone contemplating homeownership needs to be sure that they are happy with the area that they are thinking about buying a home in because moving to a different location as a homeowner is a big ordeal.  If a buyer is not sure that if they want to stay in an area for a long period of time, homeownership might not be a wise choice.
  2. Repairs: Unlike renters homeowners are solely responsible for repairs to their home.  When a person rents and the dishwasher quits working the renter just calls the landlord who is typically responsible for making these types of repairs.  People considering buying a home need to keep in mind that they only person that they can call if their roof starts leaking is themselves.
  3. Ancillary Costs:  homeownership also carries associated costs that may normally be handled by the landlord such as pool and landscape maintenance.  When determining whether or not to buy a home people need to include ancillary cots into their proposed budget.
  4. Property Taxes and HOAs:  Two other costs typically associated with homeownership are property taxes and Homeowner Association (“HOA”) fees.  Both of these fees can increase over time.  People need to make sure that they take these two (2) factors into consideration when analyzing their proposed budgets.

Homeownership can be a wonderful thing; however, it is important that a potential Buyer have a full understanding of everything that is involved with homeownership before deciding to purchase a home.