Fannie Mae Foundation: How to Buy a Home

Advantages and disadvantages of homeownership

The Looking further page is designed to present supplementary material for students working at a somewhat higher ability level. You may decide whether or not to assign the page depending
on the background and needs of your students. The vocabulary introduced
in this section is highlighted. It is not included as the core vocabulary to be taught with the lesson.

Many students at a higher basic education level are concerned about preparing to take their General Equivalency Diploma (GED) test. The GED test requires that students write a three- to five-paragraph essay on an assigned topic. Some of the Looking further topics would make good
selections for essay topics. You might consider in this lesson, for example, assigning GED students an essay topic such as “Describe the advantages and disadvantages of homeownership.”

Going further
As you now begin to develop a series of lessons on home buying, it is a good time to try to locate persons in the community who might be able to assist you. These might include your local association of real estate sales professionals, neighborhood mortgage lenders, or your local community housing organization. These professionals may be able to help you in many ways. They can provide you with sample forms, such as housing loan applications, and brochures on topics such as fair housing. These groups may provide you with information on Internet sites that
feature homeownership subjects. They also may be able to recommend speakers. Be sure to remind them to find speakers who will understand the economic conditions of your
student population and will be able to explain things clearly and in simple language.

Unit 1 : Lesson 1: This apartment is too small!

Looking further

There are many good reasons to purchase a home, but there are also drawbacks. Here is a summary of some of the most common “pros” (advantages) and “cons” (disadvantages).

Advantages

Feeling a sense of ownership. Many people like the security and peace of mind that owning their home can bring. People who own their own home know that as long as they continue to pay their mortgage and bills, no one can make them leave. And, since they will be staying there for some time, they may want to get involved in their neighborhoods, making them safe, attractive, and welcoming for everyone who lives there. They often make friends with neighbors, join local homeowner’s associations, and share in making their communities a vital place to live.

Often people who live in houses have more space, both inside and out, than those who rent apartments. When you own your house you can make changes to it that a renter never could. You can add a garage, turn a basement into a family room, build a deck, and plant trees. You can make your home the place you’ve always dreamed about.

Financial reasons. Owning a home is a good financial investment. For many people, a goal is to no longer have mortgage payments and to be able to live in their own home with only the expense of maintenance. When you rent, you never have this opportunity. Another reason for owning a home is stable housing costs. For renters, the monthly payments may go up every year. Homeowners can choose a “fixed-rate” loan that keeps the mortgage payments the same throughout a 30-year loan repayment period. A third reason is appreciation. Houses often appreciate (or increase in value) over time. When you sell your house after living in it for many years, you can often make a profit. Finally, there are tax benefits for homeowners. You can usually claim the interest you pay on the mortgage of the home you live in, allowing you a deduction in federal income tax at the end of the year.

Disadvantages

Homeownership requires responsibility. Homeowners must pay for property taxes, homeowner’s insurance, utilities, and maintenance. You must make your monthly payments
regularly to keep up your good credit rating and avoid having the lender take back your house—a process called foreclosure. Buying a house also means commitment to a
community. When you rent, you can simply give advance notice to the landlord if you want
to get a new job in another city or want to move to another part of town. For this reason,
most lenders advise that you might not want to buy a house if you think you may move in
the next year or two. Homeownership is also different from renting because you are in charge of repairs and maintenance of your home. You are the one who must mow the lawn, fix the broken refrigerator, and repair the roof. Repairs on your home are your responsibility!

Everyone is different. Everyone must decide if homeownership is for them. Think about your own life. Do you see homeownership in your future?

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