When I was coming of age, my generation was on the cusp. Somewhere between Generation X and Millennials there is a micro generation of people. That’s me.
True we’re usually lumped in with one of the others, but we lived part of our childhoods with household phones, no cell phones and no computers.
But then our teenage and college years were heavily influenced by the arrival of the internet and the worldwide connections that brought with it.
I’ve been lucky enough to be influenced by the ideals of both generations. One defined as a hardworking, sarcastic group of people that idolize Molly Ringwald and believed homeownership was the key to adulthood.
The other defined as an optimistic bunch – always dreaming of more – that can barely turn their eyes away from a screen and perhaps, wants to see the world more than settle down into a home or a job.
But somewhere between these two generations, more changed than just the look of the Apple computer.
Somewhere – someway – the American dream changed. Unlike generations before them, Millennials are opting to wait when it comes to buying a home.
Business Insider recently reported on the decrease in homeownership (dropping from 64.8 percent from an average of 65 percent to 64.2 percent) and homeownership in households headed by someone under 35 fell more than a point – from 36.5 percent to 35.4 percent.
The article listed a few financial reasons younger people are waiting to buy homes including:
- Higher mortgage rates
- Larger down payments required
- More student loan debt
With all of that, there’s still advantages to owning a home. In partnership with COUNTRY Financial, I’m looking at the pros and cons of homeownership.
Homeownership generally comes with the peace of mind that you’re investing in something for the future. Either a nest egg you can sell when you retire and downsize or a place that you will pay off and have equity in for any issues that come up. COUNTRY Financial says one of the most valuable benefits to buying a home is someday paying off your mortgage and going into retirement with a valuable asset and no debt.
While not a financial benefit, being in your own, single-family home allows you more privacy than being in a condo or apartment.
Predictable costs based on a fixed-rate mortgage
You’ll want to give some thought to how buying a home fits into your list of financial priorities, according to COUNTRY Financial. However, overall a lot of your costs will be more predictable than they are while renting. Aside from tax increases, your mortgage should stay steady and you should be able to estimate utilities more accurately since you have dedicated utility lines.
When you’re a homeowner, your mortgage interest and a portion of your property tax is tax deductible. That’s one benefit you won’t have with renting and a good source of money to start saving.
Ability to make it your own
When you own a home, you get to make it what you want. You get to paint, pick carpet, furniture and really put your mark on the property. This is something you can’t do when renting.
Long-term financial commitment
Homeownership is a long-term commitment. It’s something that you need to make sure you can afford now and in the future. Most lenders typically advise that mortgage payments should be no more than one third of your total monthly income.
Home repairs and maintenance
Once you purchase a home, you need to make sure you’ve thought about repairs and maintenance. You will run into issues and some lenders suggest you need to be prepared to spend 1-3 percent of your home’s price on maintenance and repairs. Fixes can be something as simple as re-glazing a broken window to a something major like replacing a furnace.
Buying a home requires a down payment and closing costs
Buying a home requires some upfront costs you need to be prepared for. This may have a negative impact on your ability to save for other financial goals according to COUNTRY Financial. Weighing the pros and cons of those financial goals before making the purchase is important.
Sometimes mortgages are higher than rents
The final downfall to owning your own home is, depending on where you buy, mortgages can be more costly than rent. However, you once again have to look at all the aspects here. With a house, you often get more space and a yard. Renting in the city of Chicago can cost just as much as a suburban 4-bedroom house with a yard.
How do people in your generation feel about homeownership? Is it something they look forward to or still look forward to? Or would you prefer not to be attached?
For more information on how COUNTRY Financial can help you meet all your goals, click here.