Advantages and Disadvantages of Buying a Home

By JJ Singh
Loan Page Columnist

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Deciding whether or not to buy a home can be a difficult decision. In many ways it can be a great investment, but also a large burden. Here's a list of pros and cons to help you sort it all out.


Advantages of Buying Your Own Home

  • » Equity: By making monthly mortgage payments, you are contributing to the equity in your home. You'll probably be able to get that money back when you sell. You can even borrow against your equity to obtain a home equity loan.
  • » Tax Deductions: Most of the interest you pay on home mortgages (a lot in the first few years) is tax deductible.
  • » Cashing Out: A new home is generally an appreciating asset. With current market conditions, your home's value is likely to increase, which means you can sell it for a profit.
  • » It's Yours: You can do what you like--it's your house. Decorate it to your tastes and have as many pets as you want.

Disadvantages of Buying Your Own Home

  • » Hassle: You have to deal with the lawn and the maintenance yourself.
  • » Taxes: You'll have to pay property taxes, which will be included into your monthly mortgage payment.
  • » Risk: The property value of your home could decline, causing you to lose money on your investment.
  • » Opportunity Cost: If you could put that money into an investment that would yield more than a home loan, you could be losing an opportunity.

If you're considering buying, the first step is to see what type of home you'd be able to afford. Contact a lender to see how much you'd be pre-qualified to borrow for a new home loan.

Path to Investing

About the Author
JJ Singh is a risk analyst at a micro finance institution in New York. He holds a degree in Economics from the University of Virginia.

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