Housing Services Resources

Buying a Home...1, 2, 3: Should You Buy A Home?

Before buying a home you should weigh the advantages and disadvantages of owning home and decide if buying a home is right for you. Listed below are just a few examples of the advantages and disadvantages to homeownership.

Advantages of Owning

Tax Savings

Purchasing a home can provide valuable tax savings to homeowners. Mortgage interest, property tax, and other payments associated with financing a home can apply to your tax deductions.

These deducted expenses may decrease the amount of income tax you must pay to the federal and state government.

Equity

Another financial advantage to owning a home is that as you begin to pay off your mortgage loan, you build equity in your property. In other words, equity is the value of your home minus how much you still owe on your mortgage. This equity is an asset that can be used as collateral for a new loan, or when you sell your home, can translate into a better second home.

Investment in your Financial Future

A home is usually a good investment. If properly maintained, the home should increase in value over time. Compared to other types of long-term investment, homeownership usually has a high rate of return.

Disadvantages of Owning

Higher Monthly Expenses

Your monthly mortgage payment may be larger than your rent. However, these higher monthly payments may be offset by a tax benefit at the end of the year. (You'll need to talk to a tax professional to understand your particular situation.)

Risk of Financial Loss

Property values can depreciate. You can lose value in your home for a number of reasons, such as a recession, if your home is not being kept in good condition, or a drop in a neighborhood's home values. If your home loses value and you have to sell it for less than you owe, you will still be required to repay the full mortgage.

Potential Difficulty to Sell

You may have to sell your house to move. And depending on the local real estate market, you might not be able to sell your home quickly. You should also factor in the likely expense of hiring a real estate professional and other costs incurred when selling a home.

Maintenance Responsibility

You become your own landlord. If an appliance breaks, you will have to pay for its repair or replacement. You are also responsible for the maintenance and upkeep of your home and your property.

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