To Own or Not to Own...A Home

Home ownership can be a wonderful thing, but there are pros and cons about home ownership that you need to consider before taking the leap and signing on the dotted line.

The first of many items you must consider is a down-payment. Do you have 20% to put down? If not, I advise not purchasing the home if you plan on living in it for less than 5 years. Many real estate agents and banks will tell you that you don't need 20%...of course you don't need it. There are lenders who will loan you the money with less than 20% down but these types of mortgages usually come with a higher interest rate or require the homeowner to pay private mortgage insurance (PMI) on top of their principal mortgage payment.

Back in 2008, I purchased a 4 bedroom home in Tampa during the height of the housing bubble. I got caught up in the excitement of home ownership and bit off more than I can chew...a lot more than I can chew. First off, why did I need a 4 bedroom home? I was 1 person. Secondly, I was barely making $40,000. Looking back, there was no logical way I was able to afford the mortgage payments, taxes, landscaping and other expenses that come along with owning a home. It was by far the worst financial decision I ever made.

Many people blamed the banks for the financial crisis, but I blamed myself and the people who made the same stupid mistake I did. I vowed to never make that mistake again.

That leads me to the topic of this article. Owning a home can be a wonderful thing if you are in it for the long haul. If you are only looking for a temporary living situation for about 2-3 years, I would highly recommend that you consider renting. Unless you live in a hot housing market, it will be nearly impossible to make money on the sale, and you'll be lucky to break even after closing costs.

There is an argument on the street that says you should buy a home if the monthly payments will be less than rent. This makes a lot of sense, but keep in mind the other expenses that come along with home ownership: security, utilities, landscaping, extermination, taxes, insurance, etc. After you add in all of these, determine is owning vs. renting is still a good option for you. If not, find a nice apartment and make it your home for the next few years until you determine where you want to live and can save up a 20% down payment for your future home.

If you decide to purchase a home, rent out one of the rooms to someone you trust. This can help offset some of the expenses of ownership and ensure the entire burden isn't on your shoulders. Your roommate can also take care of your fur babies if you decide to go on a vacation.

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