June is National Homeownership Month! Many times first-time home buyers wonder whether buying a home is worth the investment. Read through the information below for some of the advantages of disadvantages of buying versus renting a home. If you're wondering if home ownership is right for you, set up a time to talk with one of our friendly mortgage originators. Purchasing a home is a big deal! Our team takes the time to work with members to make sure they understand the home buying process and whether or not buying a home is the right financial choice.
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Advantages of buying a home
BUILD EQUITY OVER TIME
Every dollar paid toward a mortgages principle represents equity. When you reach 20% equity you have the ability to refinance your mortgage to secure a lower interest rate or longer repayment.
Federal Tax Deductions: As a home owner, you can deduct your property taxes and interest paid on your mortgage, reducing your overall taxes.
As a homeowner, you make the call on updates you wish to see throughout your home. You can paint walls, update kitchen, or finish your basement.
Disadvantages of buying a home
HIGH UPFRONT COSTS
You can expect to pay no less than 5.5% of your home’s value before moving in.
POTENTIAL FOR FINANCIAL LOSS
Although homeownership builds equity over time, home values can still decrease or remain flat.
RESPONSIBILITY FOR MAINTENANCE AND REPAIRS
As a homeowner, you’re responsible for covering the costs of all uninsured maintenance and repair work on your home.
Advantages of renting a home
NO RESPONSIBILITY FOR MAINTENANCE OR REPAIRS
As a renter, you’re not responsible for home maintenance or repair costs. If a toilet backs up, an appliance stops working, or a pipe bursts, you just have to call your landlord.
SOME UTILITIES MAY BE INCLUDED
In many multi-unit apartments, some or all utilities, such as water, gas, electric, internet, and cable are included.
CREDIT REQUIREMENTS ARE LESS STRICT
Renting is much easier than securing a good mortgage rate. Most landlords will rent to you even if your credit score is low.
Disadvantages of renting a home
NO EQUITY BUILDING
As a renter, every dollar you pay in rent is gone forever; you can’t build equity. For this reason, if you plan to stay in the same area for more than a few years, buying may be a smarter financial choice.
NO TAX BENEFITS
Renters aren’t eligible for any housing-related federal tax credits or deductions.