15 Pros and Cons Of Homeownership (Explained)

Owning a house is a dream for many and for the most part, it has plenty of advantages and doesn’t seem to be any disadvantages.

But like everything, becoming a homeowner does have its cons as well as pros which any aspiring homeowner must go through.

Once you get the property deeds at your hand, there will be a lot of responsibilities on your way too.

So it is always better to give an extensive thought before you buy a new house for yourself. Hence, here we come with all pros and cons of homeownership listed down below

Pros of Home Ownership	Cons of Homeownership
The good long term investment	High upfront cost
Building home equity with every mortgage payment	Responsibility and cost of maintenance and repair
More privacy	Property taxes & other taxes
You get Federal tax benefits	Less flexibility
Helps you improve your credit score

Table of Contents

Pros Of Homeownership

It is a Good Long-Term Investment

Houses may lose value over time but it is not something that usually happens. Owning a house happens to be one of the greatest long-term investments.

According to the Federal Reserve Bank of St. Louis, the average price of houses sold in the United States increased to 28% in 10 years starting from 2009 to 2019.

It is the same decade where the housing market gained $11.3 trillion in value. Owning a house is a secure financial asset that has almost assured chances of value increment.

So selling your house one day is only going to profit you. Not to mention, your house can be mortgaged for a loan and other financial securities as well.

Even if you find yourself the least fortunate one with their house value decreased over time, the land on which your house is built still grows to be more valuable.

It Helps You Build Equity

Equity is basically the difference between how much you owe and what you can get by selling the home. So, equity grows as you keep paying down your mortgage.

Whatever you will pay every month adds to the overall balance on your loan instead of adding to the interest. This helps you build more equity over time.

It Will Improves Your Credit

When you maintain your regular mortgage payments on time, your credit score will increase.

When you take your own, definitely your credit score will spiral down but that’s mainly because on paper, you only have a set amount of debt that you can take on.

It is basically that sizable debt is seemingly the amount that is proven to be repaid as per your capability of that time.

But as you set out to do regular monthly payments to clear your debt, over time, the credit score will increase and even get better as it was before.

You only need to make sure that you do not take out any big-amount loans at least 6 months after you take out your mortgage loan.

You Get Federal Tax Benefits

When you own your house, the mortgage interest you pay is deductible in the amount of $750,000 from the purchase price of your house, and so the interest on your home equity loans as well.

You will get overall Federal tax benefits by paying the loan for your purchased house.

You Will Have More Privacy & Control

As compared to other alternatives than buying your own house which is mostly to be renting or living with your relative, homeownership facilitates your ultimate privacy.

You wouldn’t have to ask for permission for creating home renovations from the HOA board or your landlord.

Having ownership of the house gives you the freedom to make adjustments in your house as per your lifestyle.

Also, you will be free to have pets or have noise restrictions. Living in your own house gives you the authority to live the lifestyle you want to make.

You Get Stable Monthly Payments

You can go for the fixed-rate mortgage where you will be able to pay the same monthly amount for principles and interest in total until the mortgage is paid off completely.

You Get Long-Term Stability

Not just living on your own is more stable but it gives you long-term stability.

According to the U.S Census, Table A-4, homeowners are found to be four times less likely to move in the same year as compared to the people who live on rent.

It was also reported that 4.9% of house owners relocated as compared to 19.7% of the renters in the year between 2018 to 2019.

And it is obvious to understand how having a house gives you a foundational ground to lay your life for a long time into a place.

Homeowners are in fact, the building blocks of society,and they are the settled residents who build communities in a place.

Cons Of Homeownership

It Comes With High Upfront Costs

There has been a time when 20% down payment was the most problematic challenge to face for renters to buy a house.

However, over time it just went down as low as just 3%. Then, there are multiple financial avenues helping renters to become homeowners.

Even there are zero-down mortgages back-helmed by the Government to make it even easier.

But it is important to understand that as the down payment will be, interest rates and mortgage insurance amount will increase for the months to come.

It does at least put you in the position to eventually become the homeowner. But then again, that’s not it!

There are other upfront costs that will burden you including the cost you will pay to your lender, probably 3% to 6% of your total loan amount.

You Have To Bear Maintenance And Repair Costs

Maintenance and repair costs aren’t cheap to bear when you own your house.

Fixing the kitchen sink for homeowners might be a joy and comforting pain given they own a house, but for the first-timers, it is painful.

Also, you won’t be equipped and skilled to take care of all the maintenance and repair work in your house, which means hiring professionals.

And, you have to spend a significant amount of money on repairs and maintenance every year and now and then as well.

The amount that sums up the expense of maintenance, repair, and annual refurbishment of your house is something that will certainly eat up a huge chunk of your saving, if not all.

You Have High Mortgage Payments

Owning a house comes with a financial responsibility as most people have to go through a mortgage to get their house.

A lot of people assume that even in renting you have to pay the monthly amount, so why not pay the mortgage amount where you at least will end up owning the house.

But that’s not true always, and it is not as simple as this. Mortgage payments can be higher than rental payments.

In this case, you might just end up overburdening your monthly earnings, increasing your monthly expenses.

This can upset your personal finance and budgeting, create tension and stress in your life to manage.

Property Tax Will Add Up To Your Mortage Payment

Where the mortgage amount already is quite high, there are taxes and additional costs which further makes it higher.

It can be really frustrating to know that property taxes will cost you extra and above the total expense of your mortgage.