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PROS and CONS of Homeownership
If you’ve never owned a home before or it has been a while since you’ve been through the process, let’s dive into the pros and cons of homeownership.
The Pros of Owning a Home
1. Appreciation
One of the key advantages of home ownership is appreciation. Appreciation is when your home increases in value over time, allowing you to gain equity. The difference between the price you paid for your home and its increased value over time represents your appreciation.
For example, over the last 10 years, homes in Melbourne, Florida, in Brevard County, have appreciated at an average rate of 3.6% per year, and they are projected to continue appreciating at around 3.45% annually. On a $500,000 home, this means you could gain equity, or cash, at a rate of $20,221 per year. After 10 years, that's over $202,000 in potential cash that you can tap into!
2. Tax Advantages
Owning a home can provide you with tax benefits. Mortgage interest is tax-deductible, which means you could save money on your taxes each year. If you're currently paying the IRS every year, a mortgage might help reduce your tax burden.
3. Renting vs. Owning
When you rent, you're essentially paying someone else's mortgage, and with rent prices projected to keep rising, this can cost you more in the long run. In many cases, your monthly rent is comparable to what you would pay for a mortgage. By owning, you're investing in your future, not someone else's.
4. Payment Stability
With a fixed mortgage rate, your monthly payment remains consistent, giving you the stability of knowing exactly what to expect. Unlike renting, where rent can increase, your mortgage payment is locked in.
5. Community and Belonging
Homeownership often fosters a sense of community and belonging. You meet your neighbors, join local meetings and clubs, and build relationships that contribute to a fulfilling lifestyle.
The Cons of Owning a Home
While there are many benefits to owning a home, there are also some downsides to consider:
1. Maintenance
Owning a home means you are responsible for its upkeep. You’ll need to make sure everything is in good working order to protect your investment.
2. Tied-Up Cash
Buying a home does require a significant financial commitment, and your cash will be tied up in your home for some time. However, many homeowners can tap into their home equity after 12 months, allowing access to some of that cash if needed.
3. Less Flexibility
Owning a home can limit your flexibility to move. If you get a job offer across the country, you'll need to figure out what to do with your house. This can be challenging to navigate.
4. A Big Commitment
Homeownership is a big commitment and can be intimidating. It's likely the largest financial decision you'll make in your life, so it's crucial to choose a great lender who will guide you through the process.
There you have many of the advantages and disadvantages of home ownership. Hope this helps in your decision to buy a home today! Although home ownership advantages and disadvantages make seem similar the sheer joy and stability that comes from home ownership outweigh most of the cons associated with owing your own home!
