Understanding the pros and cons of homeownership


Home ownership is something many families aspire to, but before you decide to buy a home it is important that you understand the pros and cons of home ownership so that you will make an informed choice. It helps to talk with loved ones who own a home and local real estate agents to get an idea of what expenses are involved in home ownership. The maintenance of a home also takes effort and money on a regular basis.

Good for building family wealth

If you purchase a home and leave it to your children and grandchildren after you pass on, your family can earn residual income that will last a long time. If your adult child inherits your home after your death, he may decide to become a landlord and rent out one side of the house to tenants. He can use the monthly rent for the mortgage, home maintenance or for his regular financial needs. Or he might put aside some of the residual income for savings.

Costs of mortgage and home maintenance are high

When you are a renter the landlord is responsible for the upkeep of the home, but once you become a homeowner, you are responsible for the maintenance. The overall expenses of home ownership are high, so this is something to consider if you plan to purchase your home. You should determine if your income level is adequate enough for home ownership and if you have regular savings that will cover emergency expenses regarding the home.

Potential for home depreciation

Should you decide to sell your home, there is the potential that it has depreciated due to real estate market conditions, improper upkeep, or a reduction of quality of life in your neighborhood. This affects how much you will be able to sell the home for.

You can design your home as you wish

An advantage of home ownership is that you can design it the way you want. For example, if you feel like adding a new basement that will serve as a game room and lounge for your buddies when they visit, it won't be a problem. Or if you want to create more space for the kitchen, you have the freedom to do so.

Creation of family memories

Another benefit of home ownership is that you will provide a lifetime of memories for the family. These memories might include teaching the kids how to ride their bikes in the garage, baking favorite desserts in the kitchen, having dance parties in the basement or learning how to sew in your mother's bedroom on the weekends. It is these memories that make home ownership wonderful.

Building home equity

Equity is defined as the difference between your mortgage amount and the market value of your property. Your mortgage payment includes the principal, taxes and insurance. As you pay off the principal, which is the actual loan amount, you increase your equity amount. This helps you build more wealth and can help if you need to use it as collateral when obtaining a different kind of loan.

In light of these pros and cons, you'll want to make sure that you have the necessary commitment to own and maintain a home.


Leave A Reply