Advantages

You Can Build Equity

  • Homes typically increase in value between 4% to 6%; build equity and provide a nest egg for the future.
  • Even if your home doesn’t increase in value, though, you’ll be building equity as you pay down your mortgage as long as your home maintains its value.

Taxes For Homeowners

  • Homeowners can deduct their mortgage interest payments and property taxes when they itemize their federal income taxes. These deductions offset the cost of your housing.

Stability

  • Your costs are predictable and more stable than renting because they’re ideally based on a fixed-rate mortgage.
  • Interest payments remain the same for the duration of the loan.

Investment

  • If you buy a home and choose to leave it, you can rent it out rather than sell and generate income. This works best if you can cover your mortgage (or more) with rental payments. With this in mind, it pays to choose a home that will make a good rental property in the future.

You Can Settle in a Community.

  • There’s pride in home-ownership
  • Once you commit to owning a home, you are more likely to become more involved in your community because you know you’ll be there for years.

Personalization

  • One of the joys of home-ownership is the ability to change your environment to suit your tastes.
  • When renting, all changes must be approved by the landlord, and sometimes you have to revert all changes before leaving.

Disadvantages

You Have to Pay for Your Own Maintenance

  • As a homeowner, you must spend time and money keeping your home in good repair.
  • You’re responsible for all maintenance on your home. This can include inexpensive repairs like fixing a broken toilet to complex and costly repairs like replacing a furnace

Property Taxes.

  • Property taxes can go up, making your home less affordable.

Foreclosure

  • As many people have learned the hard way, there’s no guarantee that your home will increase in value over time.

Buying a Home Requires a Cash Investment.

  • You need to use up your savings for a down payment and closing costs and for other expenses of home-ownership. That cash won’t be available for other investments.

Insurance

  • As a renter, renter’s insurance is recommended but not required. Your lender requires you to insure your residence, and typically you have to pay those insurance premiums along with your mortgage payment

-InCharge, MoneyCrashers