In today's society and for many years prior, purchasing a home is said to be a part of the "American Dream" and for some, home ownership is still a dream.
I remember wanting to purchase a home so bad a few years ago, but I was knocked down for different reason each time I attempted the process: credit score, income, not enough job history. Each time I would be sad that I couldn't purchase a home because of this or that, then one day I woke up! I learned to be grateful to have a home to live it whether it was mine or not. Truth is no one owns their home until the final payment on the 15 or 30 year mortgage loan has been paid in full and you receive the property deed. Other issues may come when if you don't own the land your home is on or you fail to pay property taxes.
Desiring to own a home is a great thing, but if you are not there yet it's not the end of the world. There are ways that you can prepare to be home buyer ready, but until you get there here are some pros and cons of home buying and renting or leasing a home.
Home Buying Pros
Own home - after the loan of your home is paid in full, you will own the property and receive your deed to it.
Resale with gains - if you are able to resale your home when the market value of your home is up, you can receive gains. Example: Your purchase price for your home was $200,000 with interest. You resale home for $250,000. Your gain on resale is $50,000.
Home equity - one of the reasons lots of people choose to get into a home mortgage is the ability to build equity in their homes. Home equity is the difference between what you owe on your mortgage and the current home value. If you don't decide to resale you can apply for a home equity loan against your home to maybe start a business, do home repairs, renovate your home, etc.
Home Buying Cons
15 to 30 year mortgage loan - whew, that sounds like eternity right? 30 years is a very long time to commit to a home loan. Therefore, when you decide to get a mortgage to buy a home you definitely need to ensure you are sure about where you want to live, if you think the home will have a gain in the future.
Property tax and home owners insurance - home ownership means more bills period.
Resale at loss - with a 30 year mortgage loan you can be some circumstances will happen in your life that will be out of your control and may cause you to have to sale your home at a time when you break even or even may be at a loss.
Home equity loan - the home equity that you are able to apply to receive from your home at a time when your home value is more than what you actually owe, the home equity is a loan that you have to repay back. Which means you have another loan and your home loan to repay or you may chose to pay it all within your current mortgage at an increased monthly rate. More money more money to pay for the cost of the home and from borrowing from it.
Property Maintenance - is the total responsibility of the home owner large or small.
No long term payment agreement - if you are renting or leasing a place to live the lease agreements can range from month to month, 6 month, 1 year or 2 year terms. One year lease agreements is the typical rental/lease agreement.
No property tax payments - this responsibility is left on the owner of the property.
Don't have to resale - just move when your lease contract agreement is over and you are typically done.
No repairs - maybe a few minor repairs here and there like changing a toilet set or a door knob but nothing that will kill your wallet too bad. The major repairs are the responsibility of the home owners or property owner.
No ownership - unless you are in a lease to own lease agreement, your road to owning the property on which you rent/lease is slim to none.
No gain - because you don't own the property you can't resale it for a gain. So whether the property value increase during your time renting, and the owner decides to sale, you don't get any gain for the owner selling the property.
Resign lease - resigning a lease could be a big headache, especially if your lease agreement terms are shorter than one year. Even an annual lease agreement comes around rather quickly.