Owning a home is a BIG investment. There are the cons and pros of home ownership. In this article, I will be sharing the each of the items and letting you as the reader decide for yourself if owning a home is worth it. For me I owned a home for a short time and it was a bad decision, mostly cause of the money.
Pluses to home ownership
* Building equity– in the home allows for future expenses to go towards the home in upgrading or need cash for emergency use.
*Credit– Owning a home will improve your credit score. When a person gets a loan, the score will go down since there is a large sum owned. After a few years that will change and the credit bureau will notice your are a responsible person.
*Better privacy and more options– Owning a home will allow for more better changes of the home and yard. There are more options to change and more control is in the hand of the owner.
*Staying in the home longer– When a person purchases a home, they are more likely to stay put for longer, maybe never move. Some think the home ownership as passing the home down to the children. This option is always good,
Now here are the cons of home ownership.
*Upfront costs– This is not the fun part of buying a home. Most lenders want 20% of what the home costs. Say the home costs $100,000, 20% of this would be around $6,000-$12,000 to give to the lender. If you have realtor, they get 3% of the cost of the home to them. And other fees like a inspector that will go through the home and let you know what items need fixed and so forth.
*Maintenance and repairs– As a home owner, you as the owner is in charge of taking care of the home and everything that is in the home. It can be a heavy burden, but if you watch prices and even talk to others with experience they may be able to help save you money.
*Property taxes and other fees– Here is a list of other items that comes with home ownership.
- Property taxes: Property taxes are what help pay for local services like roads, schools and fire department services. Your lender will likely include this in your monthly payment to go toward your escrow account.
- HOA fees: If you’ve purchased a condo or townhouse that operates under a homeowners association (HOA), you can expect to pay HOA fees that help pay for community amenities like a gym, pool or security system.
- Utilities: Landlords may cover some utility costs, such as trash collection or water. As a homeowner, you not only need to cover these costs yourself, but utility bills will likely be more expensive in a larger home than in an apartment.
- Homeowners insurance: Lenders will often require proof of homeowners insurance to be sure that your home asset will be protected. Homeowners insurance typically covers dwelling damage and liability damage. Your lender will likely include this in your monthly payment to go towards your escrow account.
- Private mortgage insurance: Your lender may require you to pay private mortgage insurance (PMI) if your down payment is less than 20% of the purchasing price on a conventional loan. PMI helps protect the lender in case you default on a payment. Once you’ve reached 20% equity in your home through regular mortgage payments, you can request to stop paying PMI fees.
So hope this helps in your individual life, in making a chose like this.