DISADVANTAGES OF OWNING
: Maintenance. The renter’s largest advantage may be the homeowner’s largest disadvantage. While insurance is available to protect against expenses from major catastrophes, everyday maintenance items are on the homeowner’s dime. Maintenance and repair can be as simple as repainting the baseboards or as extensive and expensive as replacing anH/VAC systemor sewer pipe. The expense will vary from year-to-year; however, you can expect to pay about one percent of the value of your home annually toward these expenses. If you live in a $300,000 home for 10 years, that’s $30,000 over the period, and possibly more if you must replace a costly, long-lived mechanical item, such as a furnace. Keep in mind the usual homeowner’s chores of lawn care, snow removal, gutter cleaning, and other regular home maintenance needs. : Upfront & closing costs. Buying a home entails numerous upfront costs. Some are paid out-of-pocket after the seller accepts your purchase offer, while others are paid at closing. These include earnest money, down payment (typically ranges from 3.5%— chiefly for Federal Housing Administration (FHA) loans — to over 20% of the purchase price), home appraisal, home inspection, property taxes, and first year’s homeowner’s insurance. : Loss of relocation flexibility. It is much easier to break a lease and move out of town than to arrange for the sale of a residence. Selling the home from out of town involves its own special logistical and financial problems, such as dealing with the mortgage while the home is on the market. : Financial loss potential. Homeownership builds equity over time; however, equity doesn’t equal profit. If home values in your area go down or remain stagnant during your time as a homeowner, the appraised value of your home could decrease, putting you at risk of a financial loss when you sell.
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