Take a look at some of the rewards and challenges of owning a home.
The benefits and the realities of homeownership
|Benefits of owning a home||Realities of owning a home|
|A place of your own
Owning a home, a townhome, or a condominium is an opportunity to settle down and gain a sense of belonging in a community. It can give you a sense of personal satisfaction to have a home of your own to share and enjoy with family and friends.
Homeownership is a large, long-term financial responsibility. If you don’t want to commit to a mortgage, taxes, insurance, utilities, and maintenance — or if your future income is extremely uncertain — owning a home may not be practical at this time.
|An asset in your future
The value of your home can potentially increase over time, making your asset grow. As you pay down your mortgage loan over the years, you can build ownership interest, called equity, which can offer financial flexibility under the right circumstances. Your home is also a legacy, financial or otherwise, for the next generation.
|Less easy to move
If you think you may need to move in the near future, buying a house or condominium may not be practical because selling it could take time. If you buy a home and then have to move, you could end up paying for the home you already own, plus the added expense of a new home.
|Manage your housing payments
In some cases, monthly mortgage payments may be lower than rental payments. This can happen when a home loan, or mortgage, has an adjustable rate with a lower monthly payment for the first few years or has a fixed-rate and the monthly payment will not change during the life of the loan. This means the amount you pay stays the same month after month — this can help you plan your spending.
|Upkeep of the home
You’ll be responsible for all utility bills, home repairs, and maintenance, some of which can be costly. You’ll also be responsible for property taxes and homeowners insurance, costs that often increase over time.
In contrast to renters, most homeowners receive tax breaks, because interest paid on a home mortgage and real estate taxes can be tax deductible. Consult your tax advisor for details.
|Increased value not guaranteed
While most homes increase in value over time, it is possible that your home could lose some of its value. You could lose money if you sell it for less than what you paid for it. Even if values in your area remain steady or increase, if you don’t keep your property well-maintained, it could decrease in value.
|A financial stepping stone
Even if your first home isn’t your dream home, paying your mortgage and other expenses on time and in full will benefit your credit rating. Managing your finances responsibly helps to increase your financial strength and options.
|Possibility of foreclosure
In an extreme situation, if you were to fail to make your mortgage payments, the lender has the right to foreclose. This means you would lose ownership of the property.
Click the Next button to learn about the costs of homeownership.