Provided by Genworth Financial Canada
Before you get too far in the homebuying process, make sure you really want to own a home. Begin by reviewing the general advantages and disadvantages of home ownership. Then think about your own personal pros and cons.
Millions of people enjoy the rewards of home ownership. Here are the advantages of buying a home. Think about the ones that are most important to you.
- A sound investment. When you carefully choose a home you can afford, the payoff can be great. Each month when you make your mortgage payment, you’re building equity in a place of your own. Equity is the portion of the property that you actually own through your payments, versus the portion that you still owe the mortgage lender. The longer you stay in your home and the more mortgage payment you make, the more equity you’ll have. And unlike most things you buy, a home can actually appreciate, or increase in value, as time passes, building more equity (but remember, there’s no guarantee that your home’s value will grow; sometimes home values go down).
- A first step. As you build up equity in your current home, it’s usually easier to afford another home in the future.
- Satisfaction and security. As a home owner, you can decorate and improve your home any way you like. Owning a home can also give you a new sense of pride in your surroundings. You and your family may feel stronger ties to your community.
It’s easy to get caught up in the excitement of buying a home, and to forget that home ownership may have drawbacks. Here are some disadvantages of owning a home. Think about which ones may apply to you.
- Bigger costs. If you’re now renting, you can expect to pay more per month for your mortgage, plus the added costs of home repairs and maintenance.
- Tying up cash. Your home might increase in value as time goes by, but don’t count on getting a big return quickly. During the first few years of ownership, you’re likely to lose more money than you gain if you should need to sell your home, because your home may not appreciate enough to cover the commissions that goes to the real estate agent.
- Tougher moves. After you’ve bought a home, you may not have as much flexibility in choosing a new location or job.
- No guarantees. There’s no guarantee that your home will increase in value, particularly during the first few years.
Home ownership isn’t for everyone, so you should think carefully about the advantages and disadvantages before signing an agreement to buy. Additional information is available from Genworth Financial Canada at http://www.genworth.ca.