As we get older and graduate from school we start to feel the increasing pressure of home ownership. Buying your first home can seem like a great idea in theory, but it is for everyone? Is it the right time for you?
There are so many factors that go into this really huge, life-changing decision and you should never just purchase a home because everyone around you is doing it. A lot of people buy their first homes because they feel like they are supposed to, not because they want to.
Before we dig into the positives and negatives about buying your first home, please consider that you don’t need to go down a traditional life path if you don’t want to, you can buy a van and live in that if you want! Don’t feel pressure to buy a home if you don’t want that life.
Also, if you’re saving for your home down payment, you can use this savings tracker to watch it grow!
Negatives of Buying Your First Home
1. Location Freedom
When you own a home you aren’t able to just pick up your stuff and leave. You’re stuck with the home until you can find someone to buy, which can take months or even years if you aren’t in the right neighborhood.
Where you want to live now may not be where you want to live in 3 or 5 years and it may not be worth the hassle of buying at this point in your life.
This is especially true if you haven’t yet gotten settled in your career. If you haven’t found your dream job, you may have to move to find that dream positive in the years to come, so it may not be worth it to buy just yet.
2. Change in Needs
If you buy a home when you’re young (especially if you’re single) chances are your needs are going to change drastically in the next 10 years and you’ll find yourself buying a new home pretty soon.
You’re probably going to have a significant other who doesn’t see that home as theirs and will want to buy a new house. Or you could have plans to pop out a few babies, and then your 2 bedroom small home that you bought at 25 isn’t going to be an ideal situation.
3. Home Repairs
The best thing about renting is that if something breaks, you don’t have to fix it or pay someone else to fix it. Isn’t that great?
Now I know sometimes landlords can take a bit of time to get over there or to hire someone else to check it out, but at least it isn’t coming out of your pocket, right?
When you own your home every single repair is your responsibility and they can get super expensive, super quickly.
4. Opportunity Cost
One important thing people need to learn about in personal finance is opportunity cost. Essentially, this is the money you could possibly miss out on by making one decision over another.
In this example, if your money is tied up in a home you aren’t able to use that cash to make yourself more money. When you buy a home you need a decent amount of money for a down payment which for a lot of people is their entire life savings.
You could have taken that $20,000+ and used it for an investment and had your money make you money for many years to come.
5. Decrease in Value
Nothing in life is guaranteed, and the housing market sometimes dances to the beat of an entirely different drum. There is definitely the chance of you losing a ton of value in your home.
There are hundreds of things that can cause the value of your home to drop, from new busy roads being built, a new factory being built, or just people moving in who don’t care much about the neighborhood.
You have no guarantee that your house will make you money over the next few years, so that may be a reason to rent!
Positives of Buying Your First Home
1. Asset Building
For a lot of the population, owning a home is the biggest asset they have. Most people aren’t investing their money in the stock market or buying real estate investments because they are scared, so they decide to buy one home to live in.
If you are too scared to invest in riskier things, buying a home is an awesome option because at least you’ll be building an asset that is worth something so you can maybe live for free in the future.
2. Income Increase
If you purchase property that’s a duplex, or triplex, you have the opportunity to live in one section of the home while renting out the other side which will increase the money in your pocket. This is an awesome system known as house hacking that’s done by tons of young people as a way to save.
Also, if you decide you no longer want to live there you have the option to keep the property as purely rental income whether or not it’s a duplex.
3. Consistent Payments
When you own your home and have a mortgage, there is no way that someone can come and raise your monthly payments like a landlord is able to raise the month each year.
Having a consistent mortgage payment for years is awesome because if your income increases you won’t have to put any of that extra money toward housing!
There are quite a few tax-deductions made available to homeowners. In some places, you can deduct some of your interest paid on your mortgage from your taxes as well as deducting some of your property taxes.
If you find yourself always paying a ton to the government come tax time, it may be worth looking into buying a home (even if it’s an investment property) to try and take advantage of home owner deductions.
Don’t like the tile in a home you own? Change it. Don’t like the wall color? Paint it!
One of the joys of owning a home is that you’re able to change absolutely anything you want and personalize it without having to ask your landlord.
6. Mortgage-Free Living
Someday you’ll be mortgage free. Can you imagine? Living in a home that’s 100% yours, completely personalized the way you want it and without any rent costs for the rest of your life. That sounds like a pretty sweet deal.
A person who buys a home young can have their mortgage paid off when they are still relatively young compared to someone who may have to pay rent forever.
Some landlords can be pretty rough when it comes to things you aren’t allowed to do. If you own your home you’re able to have parties whenever you want, have as many dogs (or other pets) as you’d like! Nobody can tell you what you can’t do inside your own home!
Mortgage payments that are made on time are an excellent way to increase your credit score and make the rest of your financial life easier. Your credit score is extremely important, so this is serious!
There are so many factors that go into this life-changing decision, and you shouldn’t take any one of these factors lightly. Do you own a home? Or did you ever own a home?
Let me know in the comments how you feel about home ownership and the factors that made you decide how to handle your living situation!
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