Determining whether you want to own or rent a home depends on your personal preferences and your financial situation. Begin by asking yourself these questions:
- Do I have a steady, reliable income?
- How much total debt do I have (credit cards, car loans, students loans, etc.)? Is it manageable?
- Can I afford to pay a mortgage and other home expenses, such as insurance, property taxes, repairs, in addition to current monthly expenses?
- Do I have money saved for a down payment and closing costs?
- Do I want the responsibilities that go with being a home owner?
If you answered “yes” to these questions, you may be ready for homeownership. Use our online calculators to help you decide what’s best for your particular situation.
There are many good reasons for becoming a home owner. Here are some advantages and possible drawbacks.
Advantages of owning a home
- A place of your own - Perhaps you’re ready to settle down in your community, need more space for you or your family, or want the freedom to change your home to suit your needs.
- Investment - When you rent a home or apartment, the money you pay as rent is an expense. On the other hand, owning a home is an investment that usually grows in value. As you make mortgage payments and the value of your property increases, your ownership (equity) increases.
- Housing costs - While rents typically increase year after year, the principal and interest portion of fixed rate mortgage payments remains unchanged for the entire repayment period. As your income increases, your payments become more affordable.
- Tax benefits - Rent is generally not tax-deductible, but mortgage interest (including purchase points) on your primary residence may be. Home owners usually are eligible for significant tax advantages not available to renters. Check with your tax advisor.
Potential pitfalls of owning a home
- Higher Costs - You can expect to pay more for housing as a home owner than you did as a renter. Even if your mortgage payments are less than your rental payments, home owners must also pay property taxes, home owners insurance, utilities, and upkeep expenses.
- Repair and Maintenance - Don’t forget the responsibilities that come along with home ownership, such as mowing the lawn and taking care of needed repairs.
- Potential Loss - If you fail to make your payments, the lender may sell the mortgaged property. This may result in you losing your home, investment, and damage your credit rating.
If you have any questions or if we can help you in any way, please contact Member Services at (804) 323-6800 or (800) 285-6609.
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