There are other things to consider when deciding whether to buy a home.
Monthly Housing Costs Can Increase
Monthly mortgage payments can be more than rent payments. However, interest from your mortgage and real estate taxes may be deducted from federal income taxes (and some state income taxes). You may owe less money on your taxes, or even get a refund. Contact a tax advisor to help you understand the tax implications for your individual circumstances for eligibility. Keep in mind, however, that to gain these tax advantages, you must file an annual income tax return with the U.S. government.
Maintenance and Replacement Costs Do Arise
Homeowners are responsible for things that landlords pay for when renting. These costs include repairing appliances, painting the house, and mowing the lawn. Older homes, while sometimes cheaper to buy, may have more maintenance and repair costs, such as roof, plumbing, or heating repairs.
Our Maintenance and Replacement Costs Worksheet can help estimate these types of expenses associated with a home you may buy and you can plan for these expenses.
Mobility Can Be Limited
You won’t be able to easily move to another home until your current house is sold. You’ll also probably have to rely on a strong local real estate market to be able to quickly sell your current home.
Selling your home may also have some costs, such as hiring a real estate professional, local sales or transfer taxes, moving expenses, and possibly paying for temporary housing until your new house is ready.
Property Values Can Depreciate
It is possible that your property could depreciate or lose some of its value for a number of reasons. Perhaps the house deteriorates due to lack of maintenance. Or maybe the property values of most of the homes in a neighborhood depreciate as a result of economic conditions, bringing down the value of your home as well.
When a house depreciates significantly, it can sell for less than what you paid for it. As a result, what you owe on your mortgage might be more than what you could sell the house. If that happens, you would have to pay the remainder of the loan balance and take a loss on the house if you sell it.
Most homes increase in value rather than decrease, but it is important to understand that property values can go down.
