The decision to buy a home is a big one and should not be made lightly. If you are planning to buy a home, you probably have good reasons in mind, ranging from the purely personal to the very practical.  But homeownership is not for everyone.  There are many good reasons for becoming a homeowner, provided you are ready for the increased responsibilities that come with it.

Advantages of Homeownership

If you are planning to buy a home, you probably have good reasons in mind. Some of the major advantages are described below.

A Place to Call Your Own

“Your home is your castle.” Perhaps you are ready to settle down in your community and want to have the feeling of permanence and involvement that comes with owning your own home. Maybe you need more space for your family. Or maybe you want more freedom than you currently have as a renter to change your home to suit your individual taste and needs.

Financial Advantages

Owning your own home can offer a number of financial advantages, some of which are noted below.

Scheduled Savings

When you are a homeowner, your monthly mortgage payments serve as a type of savings plan. Over time you will accumulate what lenders call “equity,” an ownership interest in your house that you may be able to borrow against or convert to cash by selling the house. On the other hand, renters continually pay rent to a landlord for as long as they rent without the opportunity to build up equity.

Stable Housing Costs

While rents typically increase year after year, the principal and interest portion of most mortgage payments remains unchanged for the entire repayment period. Because of the effect of inflation, you pay the same amount with ever “cheaper” dollars.

Increased Value

Houses typically increase in value over time. It's not unusual for a house that sold fifteen years ago to be valued at much more than its selling price today. This increased value is as good as money in the bank to the homeowner.

Tax Benefits

Homeowners are eligible for significant tax advantages that are not available to renters. Most important, the interest paid on your home mortgage usually is tax deductible and therefore can save you a substantial amount each year in federal income taxes.

Possible Drawbacks of Homeownership

Owning a home requires a significant investment in time, energy, and money. You don't want to overextend yourself to the point that you don't have a penny to spare for anything else. Below are some possible drawbacks of homeownership for you to consider.

High Costs

Usually you can expect to pay more for housing as a homeowner than you did as a renter, especially for the first few years. Even if your mortgage payments are less than your previous rent payments, as a homeowner you must also pay property taxes, homeowner's insurance, all utilities, and upkeep expenses.

Decreased Mobility

As a homeowner you cannot move as easily as a renter by simply giving the required notice to the landlord. If you anticipate moving to a new location within the next year or two, this might not be the ideal time to buy a house.

Repair and Maintenance

Don’t forget that responsibilities such as mowing the lawn and taking care of needed repairs come along with homeownership. Actually, the promise of getting the advantages of homeownership without the accompanying repair and maintenance responsibilities is a major factor in the popularity of condominiums.

Possibility of Foreclosure

If you fail to keep up your payments, the lender may sell the mortgaged property. This is called foreclosure and can result in the loss of not only your house but also your investment and good credit rating.