Owning a home is the American dream. And with mortgage interest rates still low and a good economy, it is a great time to make that dream come true, whether you are a first-time buyer or moving up to your dream home.
I am, clearly, a huge advocate of home ownership, but there are positives and negatives.
Even with a mortgage, which most of us must have in order to purchase a home, you are investing in something that will someday bring you some return. However, I think we fall into the trap of thinking our homes are money makers, and that is not the type of investment a home should usually be. A home should be an investment in that you are going to be able to re-coup what you have put into it at some point as opposed to rent, which never comes back to you. But it isn't a given that this will work out. As we learned in the Great Recession, home values can decline below what you paid for the house or have invested in it in principle. And if you have re-financed and cashed out your equity, well, guess what, you already got your pay-back.
But a few things recently also brought to my mind the tangible realities of owning a home. A client recently closed on an older home that was well-maintained. The client had had a home inspection, which can evaluate things as they are, but not what might happen tomorrow. And sure enough, the day after closing, the hot water heater went out. Then the dishwasher quit working. ARGH. What an unpleasant surprise to thave to pay for new appliances after just paying for the house with what you thought were working appliances! This client had waived getting a home warranty plan, which might or might not have covered these appliances (they have lots of small print, especially for older units). He took it in stride, saying that this is part of owning a house.
And he is right. When you are renting, if something quits working, you call the landlord. You don't have to pay for it. But when you own a home, it is surprising how many things can eat up that money you were saving for vacation. We bought our current home a little over a year ago. It was built in 2005, so that seems pretty new to me considering all the nearly 100 year old homes I have owned and the general age of homes in and around Asheville. But these days, 10-15 years is about what you can expect for appliances to last. So in the last year, we have replaced the water heater, dishwasher, oven/range, and had serious work done to the HVAC. We also had to replace undersized gutters, cut down some threatening trees, fix electrical issues, and there are still some less urgent things we need to address.
Some days, when I add all that up, I think, "maybe we should just rent!" But no, I am not cut-out to be a renter. I love the feel of ownership, even if it is a little delusional since the bank owns my house until I pay it off. But I can do what I want to my house. I can plant what I want in my yard (as long as the HOA doesn't complain). As I pay down my mortgage, my payments are far less than comparable rent would be, and I can take the interest off on my taxes. The value has gone up already in the year we have owned it, so at this point, it is a great investment.
But most importantly, I feel that it is my home, and that I can be emotionally attached to it and my little plot of land. It gives me a sense of stability that renting never could. My mom is still in the house that she and my dad bought in 1969. It is a part of our family, and through my many moves it made me feel like there was always a place that was home. I still love that home in which I grew-up, but now I have my own "forever" home and feeling of permanance. And that is priceless.
Is home ownership sometimes a burden? Sure. Is it worth it? You bet.