Owning a home is a 'dream come true' for every person. However, it is a dream that remains unfulfilled for many people; it can also become a nightmare for some if proper thought to home ownership is not given. The purchase or buying of a home is one of the largest financial decisions and commitments in a person's life and it is all the more essential to understand and consider the pros and cons of owning a home before making the once-in-a-lifetime decision .
Probably the largest obstacle in buying a home is putting together or setting aside the down payment or deposit. Rising housing rates are extending this beyond the reach of common people. Even if that can be done, working out a suitable loan or mortgage plan keeping long-term revenue earnings and other financial outlays in mind is a huge task. The more the deposit or down payment towards a home purchase, the cheaper the interest rates and loan repayments.
Financial analysts and experts advise that every person aspiring to buy a home should ask themselves these basic questions.
1. Is it an absolutely necessary requirement?
2. Are my earnings and income going to grow?
3. Is long-term stay in a location for me and my family guaranteed to purchase a home?
4. Do I have adequate savings?
5. Am I completely up to accepting the responsibility?
If the answers to all of these questions are more than satisfactory, then probably home purchase is a good option. The pros and cons of home buying vary from person to person depending upon factors such as financial position and commitments, future plans for self and family, health conditions, lifestyle, personal desires, work options, etc.
Against this home purchase option is choice of renting or leasing a home or apartment. This may work out beneficial for some, not all and depends largely on personal circumstances and situations in control.
However, it is helpful to understand the advantages and disadvantages of home ownership in comparison to renting a place.
Owning a home
The advantages of home ownership are many, chiefly they are:
• Undoubtly, there is greater pride and self esteem in owning a home
• Access to greater privacy
• Probable increase in home and property value with the vagaries of the real estate market
• Predictable costs if on a fixed-rate mortgage plan
• Beneficial tax deductions
The disadvantages include:
• Long-term financial commitment; term could stretch up to retirement
• Maintenance, repairs and replacement responsibilities and expenses
• Inability to leave a location and move for whatever reason
• Home value could plummet in a down-turn
• In the event of sickness or inability to continue career, loan recovery can take away home
Leasing or renting an apartment
The advantages in home rental or lease depend large on financial prospects and the impact on lifestyle.
• Greater convenience and suitability for a constantly moving job
• Rentals are cheaper than home purchase; in addition utility costs are included in rent payouts
• Home maintenance and general upkeep of the home is the responsibility of the property owner
• More value for money especially when obtaining access to facilities like swimming pool, lounge, play area, community hall etc.
On the downside, there are these factors to consider:
• No tax breaks or benefits can be claimed
• Unlimited fixed-rate mortgages in home ownership, rentals are likely to increase year after year
• Leased or rented home does not provide the self esteem of a 'roof over your head.'