Are you a renter wondering whether homeownership makes more sense at this point in your life? Use the list of advantages and disadvantages below to evaluate the relative costs, benefits, and drawbacks of owning versus renting your home.
Full Details on Advantages and Disadvantages of HOMEOWNERSHIP
As you pay down the principal on your mortgage you are increasing the amount of equity you own in the property.You may also be able to increase the amount of your home’s value with home improvements such as paving a driveway, adding a garage, or redesigning the outdoor space to add curb appeal. Even small changes can have an impact on the value of your home.
Stability and Sense of Belonging to a Community
Homeowners tend to put down roots and stay in one place longer than a renter might, thus allowing them to become active members in the community in which they live.
As a homeowner you will have fewer restrictions over the choices within your home, provided you are not breaking local building codes or Home Owners Association (HOA) regulations. You will have more creative freedom to paint your walls, build a patio, replace old windows, update fixtures, etc.
As a homeowner you will no longer be dependent upon a landlord to fix items or maintain your property. Not only will you have a choice over which items are replaced or added, but you will be able to do them on your own schedule.
Cost Benefits –
Surprisingly, many times the monthly cost of owning a home can be less expensive than renting.
Although 30 years of payments on a home is a long time you are constantly building equity for use in retirement.
Securing a fixed interest loan will also provide a long term stable payment that will not increase or decrease over the life of the loan.
The federal tax code can provide a number of benefits for homeowners ranging from property tax deductions and mortgage interest deductions to home improvement credits.
When you buy a home, a sizable amount of money will be needed for the initial down payment, closing and insurance costs. This sum can seem like a formidable amount of money, equaling several months' or even a year’s worth of rent. MaineHousing’s Advantage program can help first-time homebuyers make a down payment.
Costs associated with the maintenance and daily upkeep of your home can quickly add up. These can include trash pick-up, water and sewer service, lawn and garden maintenance, pest control, tree trimmings or removal, and other such maintenance fees.
Annual Taxes and Fees
Property taxes, insurance and possibly HOA dues can tack on a hefty price tag that will need to be paid on an annual basis.Some lenders will require or offer an escrow account to help pay for these items as part of your monthly mortgage payment instead of a yearly lump sum.
Potential for a Financial Loss
Equity in your home does not automatically equate to profit. If the value of your home decreases during your time as a homeowner, then your financial gain might also decrease.
Loss of Mobility
Once you have a purchased a house you lose the ability to pack up and move with ease. It takes both time and money to sell a property which may ultimately result in a net loss.
Full Details on Advantages and Disadvantages of RENTING
As a renter you will have little or no responsibility for the daily maintenance or repair costs associated with your home. You don’t have to call an expensive repair person – you just need to call your landlord.
Freedom to Move
Relocation is far easier when all you need to do is give notice to your landlord instead of selling a property.
If a credit check is required during your rental application process, qualifications are generally less strict than if you were applying for a mortgage.
Inclusion of Utilities
Depending on where you rent, utilities such as heat, hot water and even cable may be included in your rent, easing the monthly burden of added expenses.
Lack of Equity
Rental payments will not give you a share of ownership in the property so when you leave the property you will walk away with nothing.
You may be limited to what you can do or bring into your home such as decorating or having pets.
Rental payments will never stop as opposed to a mortgage. In addition, your rent amount will likely increase even if some level of rent control is in place.
Possibility of Eviction
If the landlord sells the property, you may be forced to move with little recourse.