Did you know?
A home warranty helps protect a new homeowner against unexpected bills for covered repairs or replacements of major systems and appliances that break down after purchasing a home.
That means if you buy a house and the central air conditioning breaks, a home warranty will pay for the cost of repairing or replacing the system.
Do you really want to own a home? That question seems silly, because we all think we want to own a home. But the decision to buy a home is not one to be made lightly. Owning a home can be either an asset or a liability. The best way to start the home-buying process is to answer this question, and take a realistic look at what owning a home really means.
Possible drawbacks to homeownership
High cost of homeownership
Buying a house can put a considerable strain on your finances. Typically, you can expect to pay more for housing during the first several years as a homebuyer than you did as a renter. Even if your mortgage payments are less than you paid previously per month in rent, you must also pay property taxes, homeowners insurance, utilities and upkeep expenses.
Repairs and maintenance
Some people shy away from buying house because they don't want the responsibility of maintaining a home — the unending mowing of the lawn, the leaking roof, and when the air conditioning breaks there is no landlord to call to come fix it. As a renter, you may have grown used to free plumbing, and having handy-man services. As a homeowner, you will pay these costs out-of-pocket, or do the repairs yourself. Some people prefer to live in a condominium, where many of these responsibilities are taken up by the condominium association, giving you the equity advantages of homeownership without the accompanying repair and maintenance hassles. The downside of condominium ownership, however, is that condo fees can suddenly go up, and cost you thousands of dollars.
A renter has the flexibility, when he or she gets tired of the neighbors or wants to reduce the monthly bills, to just write the landlord a little note and pack up the moving van and go. A homeowner cannot move after simply giving a note to somebody. You have to sell the home, and selling your home can be a daunting enterprise if you're in a hurry. Typically, it take 8 weeks just to find a buyer, and another month to actually close the deal — if the deal doesn't fall apart in that time. If you anticipate being transferred to a new job location within the next year or so, this might not be the best time for you to buy a house.
Possibility of foreclosure
Foreclosure is the sale of a mortgaged property by the lender after the borrower fails to make the monthly mortgage payments in a timely manner. This is known as defaulting on the mortgage. If you are typically a little late in paying your bills, or tend to miss a month here and there, the mortgage lender can come take your house away.
A mortgage payment represents a large financial obligation extended over a long period of time. This can be an intimidating factor if — situationally and financially — you don't know where you are going to be down the road. Banks can and do foreclose on people's homes of any income when they fail to keep up their monthly payments. This can result not only in the loss of your home, but also in the loss of your investment and your credit rating, making it harder for you to ever buy a home in the future.