Buying a home is a major financial purchase. As is the case with any financial decision you have to make in life, pros and cons come along with deciding to be a homeowner. If you are having an inner struggle as to whether the pros outweigh the cons, take a moment to review the advantages and disadvantages, so you can make the decision that is financially sound for you.
Numerous advantages exist for buying and owning a home. Some are financial benefits. Other benefits manifest themselves personally. Consider some of the reasons why homeownership is satisfactory.
- Tax Write-Off: Your home is one of the biggest sources of tax write-offs for you. Since your home also tends to be one of your biggest assets, it makes sense. Tax deductions for your home can vary from person to person, but generally you can write off all or a portion of the interest you pay on your mortgage and the real estate taxes. For the tax year when you buy the home, you can also write off some of the closing costs. If you work from home or run a business out of your home, then you can also deduct a portion of your electric bill, phone and Internet service, as well as other costs affected by your home business. You should consult with a tax professional to discuss your personal tax situation.
- Build Equity: Homes tend to appreciate in value over time. Especially when you buy a home at a low price, by the time you go to sell the property, the home tends to be worth more money. The money you earn in the home is equity, which is beneficial in a couple of different ways. One, you can access the equity in your home to use the money for other purposes. Second, when you go to sell the home, any equity you have in it becomes a profit for you.
- You Can Express Yourself: Personally, owning a home provides you with a sense of personal satisfaction. You can take pride in owning a home, which is not a feeling that renting necessarily provides. You also have the ability to change the design and décor of the home to fit your own personal style. You have fewer limitations when you own a home than when you are a renter living in someone else’s home.
Hands down, the biggest cons of buying and owning a home all have to do with the cost of homeownership. Keep in mind that some of the costs are offset by your tax deductions, but they are costs you need to be aware.
- Up-front fees: When you buy a home, you have to come up with money for a down payment, closing costs and additional costs such as inspection fees.
- Taxes and Insurance: In addition to your monthly mortgage payment, you also have to pay the taxes and insurance on your property.
- Maintenance: When you own a home, any repairs or remodeling required is your financial responsibility.
As is the case with any major purchase you make in life, there are good points and not so good points that come along with the decision. Only when you weigh the pros and cons of your choice can you truly decide that buying and owning a home is the right one for you.