Pros And Cons Of Buying A House: The Ultimate List

Lauren Nowacki

6 - Minute Read

UPDATED: Apr 5, 2024

Share:

You’ve heard it said before: Buying a home is a big deal.

While the advantages of buying a home can be alluring, there are some disadvantages you’ll need to consider to make sure you’re truly ready for the responsibility. To help you make your decision a little easier, we’ve come up with a list of some of the most common – and sometimes ignored – pros and cons of buying a house.

Homeownership Pros And Cons At A Glance

Here’s a quick view of the pros and cons of buying a house:

What's your goal?

Get Started

Pros

Cons

Invest and build equity

Upfront costs

Tax deductions

Takes time to build equity

Can help increase your credit score

Market fluctuations

Privacy

Time isn’t always on your side

Control over your space

Maintenance and home repair

Stable payments with a fixed mortgage

Property taxes and other recurring expenses

Feeling of accomplishment

Less flexibility to move

 
 
 
 
 
 
 
 

What's your goal?

Get Started

The Pros Of Buying A House

There are many emotional and financial benefits to owning a home. Here are just a few ways you can take full advantage of all the good that comes from homeownership:

Investing And Building Equity

Many people see a home as an investment. That’s because you can build up home equity, which is the amount left after you subtract your mortgage balance from the current market value of your home. For example, if your home is worth $100,000 and you owe $50,000 on your mortgage, you have $50,000 in equity.

Your home equity can grow as you pay down your loan balance and your home appreciates in value. Homes typically appreciate, though it may depend on location and the state of the housing market. According to a U.S. Home Price Insights report, home values increased 18% from October 2020 to October 2021.

Are you a homeowner and curious about how much equity you can accumulate? Use our home value estimator and subtract your monthly mortgage payments from the results. Keep in mind that you’re looking at an estimate – the numbers won’t be exact. This is especially true if you’re a renter because you’re not paying an actual mortgage amount.

Tax Deductions

Homeowners can receive itemized tax deductions on certain home expenses, which include mortgage interest, property taxes and essential home improvements, like installing medical equipment and safety devices. Homeowners should review state and federal laws to see which expenses qualify.

Credit Score Boost

Making on-time monthly mortgage payments can build your positive payment history, which can help raise your credit score. Mortgages can also help boost your score by adding diversity to your credit mix. A good credit mix signals to lenders that you can handle different kinds of debt.

Privacy

Houses are typically more spread out than apartments, condos and townhouses. Most homes have a yard, and you likely won’t share a wall with strangers. That means more privacy, fewer noise complaints and more outdoor space to enjoy. While you may have nosey neighbors, it’ll be a lot harder for them to get all the dirt when you have more space – and maybe even a fence – between you.

Control Over Your Space

Unlike renters, homeowners have more freedom over their space. Since they own the home, they can decorate, renovate and maintain it however they want. They don’t have to worry about pet policies or security deposits. The only limits they observe are set by their lender, local laws and codes and their homeowners association (HOA) if they belong to one.

Stable Payments

Rent will likely fluctuate for tenants as the cost of living rises, but homeowners with a fixed-rate mortgage can expect to make the same principal and interest payment each month. However, if a homeowner uses an escrow account, their monthly mortgage payment may change because property taxes and homeowners insurance rates can change annually.

Eventually, a homeowner can own their home free and clear, meaning they’ll never make another mortgage payment to anyone again. If you rent for the rest of your life, you’ll pay rent for the rest of your life. Consider using a renting versus buying calculator to see how much money you might save by purchasing a home.

Feeling Of Accomplishment

Buying a house is a hallmark of the American dream. Many new homeowners often feel a sense of pride and accomplishment when they hit this milestone. A home can bring stability to your life. It can be a dwelling where you and your loved ones feel safe, warm and comfortable. And it can be the place where you create memories, build a family, host parties and celebrate holidays.

The Cons Of Buying A House

While homeowners can take advantage of the many benefits of buying a home, there are a few drawbacks prospective home buyers should be aware of before signing a mortgage.

Upfront Costs

Several costs are associated with buying a home. One of the most common – and costly – is the down payment. While you’re not required to make a 20% down payment, even a 3% – 3.5% minimum is typically in the thousands. For example, if you’re purchasing a $200,000 home, your minimum down payment may be $6,000 – $7,000, depending on your loan. If you don’t put down at least 20%, you’ll pay private mortgage insurance (PMI).

In addition to the down payment, you’ll pay closing costs. Closing costs are the various fees charged to complete your real estate transaction. They’re due at closing and typically range from 3% – 6% of a home’s purchase price. Using our example, you’d pay an additional $6,000 – $12,000 in closing costs on the $200,000 home.

Takes Time To Build Equity

While home equity can be a major financial benefit of owning a home, it takes time to build it. You can build it slowly but surely as you pay down your mortgage balance. You can speed up the process by making extra payments to your principal balance or starting with more equity in your home by making a larger down payment.

While the market is hot now, it can cool. And when it does, it will take more time for home values to rise. You can increase your home’s value by making renovations or adding certain features. Of course, renovations and upgrades will cost money.

Market Fluctuations

As mentioned above, the housing market fluctuates. This can put you at a disadvantage. If you’re buying a home in a seller’s market, you may have to deal with competition from other buyers and higher listing prices. You may have to wait out the market.

For home sellers, a buyer’s market can be a big disadvantage. Because there’s more supply than demand, a seller may have to deal with competition from other sellers. A home may sit on the market longer or sell for less.

To avoid buyer disadvantages in the real estate market, consider the real estate trends in the areas you’re interested in and try to time your purchase to when it can benefit you most.

Time Isn’t Always On Your Side

Prospective home buyers who want to enjoy the benefits of owning right away really need to consider just how long it takes to buy a house. Not only can the decision to buy a house and the home search take longer than expected, but so can the financial preparations to ensure you’re in a good position to buy a home, which includes being able to afford the upfront costs, maintenance and repair fees and other regular home expenses.

Maintenance And Repair

People often focus on the upfront costs of buying a home, including the down payment and closing costs, but there are other costs of homeownership to consider. Along with day-to-day expenses, like cleaning and utilities, there are also maintenance and repair costs. And depending on the problem, they can be expensive. If you have roof issues, water damage, plumbing or HVAC problems, you’ll likely spend thousands of dollars to fix them.

Property Taxes And Other Regular Fees

Along with maintenance and repairs, there are recurring costs associated with owning a home. Property taxes are typically paid semiannually, depending on where you live and how much your home is worth. As a mortgage holder, you’ll also carry homeowners insurance, which covers damage and liability for your home. Your lender usually rolls property taxes and homeowners insurance into your monthly payment.

Then there are the monthly utility bills you pay to run the heat, electricity and water. And if you’re part of a homeowners association, you’ll pay HOA fees.

Less Flexibility

When you become a homeowner, you make a long-term commitment to a location and house. Renters are typically tied to a lease that lasts anywhere from 6 months to a couple of years. Even then, they may be able to break the lease and face minimal financial consequences. As a homeowner with a mortgage, you can’t just break it early – unless you pay it off. Typically, you pay off your mortgage with the proceeds from selling your home.

However, before you sell, you should live in the home for a few years to pay down your mortgage, build equity and recoup the money you spent on closing costs when purchasing the home. You’ll also need to live in the home for at least 2 years to avoid capital gains tax.

The Bottom Line

While there are some disadvantages to owning a home, for many homeowners, the good outweighs the bad – especially when it comes to the emotional impact of homeownership on their lives. If you’re ready to find your dream home,connect with a Rocket HomesSM agent today to help you jump-start your home buying journey.

A woman with long hair smiles at the camera.

Lauren Nowacki

Lauren is a Content Editor specializing in personal finance and the mortgage industry. Her writing focuses on reporting the best places to live in the U.S. based on certain interests and lifestyles. She has a B.A. in Communications from Alma College and has worked as a writer and editor for various publications in Philadelphia, Chicago and Metro Detroit.