Roughly 10 years back I had an aunt and uncle who retired and rented a condo in Las Vegas. Uncle Jim (pseudonym, anyway that's what I'll call him) was a retired minister. During his career, he and his wife stayed in parsonages, which are homes given by the congregation while they ministered there.
Uncle Jim and his wife expressed that the biggest error they ever made was not to buy any house as an investment. In the year they retired, when their other friends who retired were staying in homes that were practically paid off and had appreciated much, he and his wife were using a huge part of their little retirement money to pay expensive condo rent. They strongly warned me not to make the same mistake they made.
Latest studies are showing that there are many advantages for both the community and the owners for owning your own home, as well as increased education for children, a higher lifetime annual income for children and lower teenage pregnancy rate. Asides these, below are some of the major advantages of owning your own house.
More Stable Housing Costs
Rent payments can normally rise every year and very unpredictable but most mortgage payments stay the same for the whole loan period. If the taxes rise, the increase is normally gradual. This stable housing cost particularly important during inflation when owners make money and renters lose money.
Homeowners can be qualified for significant tax savings since you can deduct mortgage interest and property taxes from your federal income tax, and also many states' income taxes. This can be a considerable amount of money at first because the first few years of mortgage payments are made up mostly of interest and taxes.
If you need to refinance to consolidate other debts (an opportunity you don't have if you are renting) the interest on this is also tax deductible.
Rather than payments vanishing into someone else’s pocket, homeowners are building equity in their own home. This is always one of a person's biggest investment contributions. Every year that you own the home you pay more to the principal, which is money you will receive back when the home sells. It is like having a planned savings account that develops faster the longer you have it. In case the property increase in value, and generally it does, it is like money in your pocket. And you are the one who receives the benefit of that, not the landlord. You can then use this equity to plan for future goals like your child's your retirement or education.
It is Yours!
Once you own a home you are in control. It gives you the liberty to beautify it and landscape it anyhow you like. You can have a pet or two. No one can pop in and inspect your home and intimidate you with eviction.
Even young people, like college students out on their own, can sometimes profit from home ownership. It puts them way ahead of other young people their age financially by assisting with their credit and giving them what is often a brilliant investment. Often times a college student buying a home will rent the rooms out, and his or her roommates end up making the payments for the house. When the student is set to leave, she or she can sell the home (hopefully making a profit) or keep it as an investment and continue to rent it.
Buying a home is a vital decision. It is often the biggest acquisition a person makes in his or her life. Homeownership comes with some better responsibilities and is not for everyone. There are some drawbacks to homeownership that you should take into account.
Your expenses monthly may rise, depending on your condition. Even if the payments monthly are the same, homeowners still have to pay property taxes, all the utilities, and all the upkeep and maintenance expenses for the home. Often you need to supply appliances that were equipped with a rental.
Decreased Freedom of Mobility
Homeowners can't easily move as a renter who just has to give notice to the landlord. Selling a house can be a difficult and overwhelming process.
Risk of Depreciation
In some areas with inflated prices, there may be a risk that the house will depreciate instead of rising in value if the prices go down. If you then sell the house, you may not get much money from the home to pay back your mortgage, and may still owe the mortgage company money.
Possibility of Foreclosure
If for some reason you are unable to make your payments, you risk having the lender foreclose on your property. This can result in the loss of your home, any equity you have earned, and the loss of your good credit rating.
When considering home ownership, you need to weight the advantages and disadvantages for yourself. If you are like most people, you will find that homeownership is worth the risks and disadvantages.