What Are the Risks?
Yes, owning a home is a good investment, but there are risks. If you understand the benefits and risks of home-ownership, you can make the best decision about when to buy a home.
So what are the risks of home-ownership?
- Monthly housing expenses can increase. Your monthly mortgage payment may be larger than your rent. These higher monthly payments may be offset by a tax benefit (in a few instances only) at the end of the year. Talk to a tax professional to understand your particular situation.
- You become your own landlord. You alone are responsible for the maintenance and upkeep of your home. You should make provision for this in your monthly budget, which will increase your monthly expenses.
- You must sell your house if you want to move. Depending on the local real estate market, you might not be able to sell your home quickly. You should also factor in the likely expense of hiring a real estate professional. Fees can be negotiated and vary according to agent.
- Property values can depreciate. Your home can decrease in value for a number of reasons – recession; the condition of your home not being kept up; a drop in a neighbourhood’s home values. If your home loses value and you have to sell it for less than you owe, you will be required to repay the full mortgage.