Homeownership comes with a plethora of advantages and disadvantages. Whether it is worth it for you to purchase a home depends on a number of factors. Let’s dive into the pros and cons of purchasing a house to help you decide if it is the right choice for you.
The Pros of Buying a Home
- Investing in your own home equity
Instead of paying your landlord every month to rent out an apartment or house, you’ll be investing that money into your own home equity. As you build equity, the value of your home increases. This also opens the door to refinancing options and other capital gains that can come from being a homeowner.
- Improves your credit
As you keep up with regular mortgage payments, your credit score will go up over time. However, when you first take out the mortgage, your credit score will likely take a dip. This will naturally raise over time as you make payments on time and show that you can responsibly pay off this loan. Make sure to avoid taking out any other large loans for the first year after taking out your mortgage, or your credit score may be in trouble.
- Tax benefits
If you itemize your tax deductions as a homeowner, you can likely deduct your mortgage interest, property taxes, and some home improvement costs. In order to maximize the return, do the math and determine whether it makes more sense to itemize the deductions or take the standard deduction. Having a house can provide a multitude of tax benefits if done correctly.
- Privacy and control over your living arrangements
When you own your home, you can make adjustments and changes as needed to most benefit your family’s needs. You have complete control over what arrangements can be made and don’t have to report your changes to a landlord.
The Cons of Buying a Home
- High upfront costs
High upfront costs could be the largest and most obvious con to buying a home. You’ll have to cover the down payment, closing costs, and other expenses like the appraisal fees, inspection fees, and title insurance. The down payment alone can be an overwhelming cost, especially for first time homebuyers.
- Maintenance and repair
When you own your home, you can’t call the landlord when there’s a plumbing problem. Everything that needs to be fixed is your obligation to repair, and also your financial responsibility. This can become overwhelming and also add up quickly if there is a large issue that has to be resolved, like a slab leak. These costs can even include the general upkeep of the property, like gardening work, changing the air filters, or cleaning the gutters.
- Property taxes and other fees
Property taxes are levied by local governments and are based on the assessed value of the property. The amount of property tax you pay depends on the location of the property, its value, and the local tax rate. Property taxes can be a significant expense, especially in areas with high property values and tax rates.
- Less mobility
When you buy a house, you are tied to that particular location, and it can be challenging to move quickly if you need to relocate for work or other reasons. Selling a home can also take time and money, and you may not always be able to sell your home for the price you want. If you are someone who values flexibility and the ability to move around, homeownership may not be the best option for you.
While owning a home can be a great investment and a source of pride, it’s essential to weigh the pros and cons before taking the plunge. When you decide you’re ready to dive into the world of home ownership, reach out to the San Diego real estate professional, Karly Lobbin, to find your dream home!
