So you’re thinking of buying a home, but you can’t quite figure out if it’s a financially sound move. On one hand, renting a house or apartment certainly takes a little bit of responsibility away, and you’re not sure if you can come up with the money for a down payment and those other upfront expenses. On the other hand, owning a home is a wonderful investment; and any money you put into it goes right back into that investment. It also means you won’t have to worry about finding a new place every year or so when your lease is up. It sounds like a great way to guarantee a secure future. You’ve done the math. The mortgage payment will be less than you’d pay in rent, which will save you a ton of money each month, right? Actually, that might not be true. While owning a home is typically cheaper than renting in the long run, there are some extra expenses that come with homeownership. Let’s take a look at some of the factors you might not have thought of when making your decision.

The mortgage payment won’t be your only monthly home expense.

A typical mortgage payment will be less than the amount you’d pay in rent for a comparable home. But don’t make the mistake of thinking that it will be your only monthly expense when it comes to ownership. In addition to paying the principal and interest on your loan each month, you’ll need to include homeowners insurance, property taxes, and sometimes private mortgage insurance depending on your loan type. If your home is in an area that has a homeowners association or regime, you’ll need to account for those HOA dues or regime fees as well.

You need cash for closing costs.

That is unless you can negotiate to have the seller pay closing costs. Even then, there are some costs that must be paid by the buyer. Closing costs vary per sale depending on a lot of different factors, but they’ll usually include things like the costs of appraisals, inspections, a title search, and title insurance. Your lender should be able to give you a good estimate of what to expect when it comes to closing costs, but you won’t know the actual figure until closer to closing day.

You’ll qualify for extra tax benefits.

Owning a home comes with some tax benefits that you won’t get as a renter. Each deduction comes with stipulations, so it’s best to consult a tax pro to see if you qualify. Some of the most common deductions are:

  • A portion of your mortgage interest
  • A portion of any “points” or fees on your loan
  • Portions of home improvement and home equity loans
  • A portion of your state and local property taxes.

Don’t forget the emergency savings fund.

You might be wondering if this is absolutely necessary. Take it from us—it is. The typical homeowners insurance policy doesn’t cover every little thing that might happen to or in your home. And while you might have gotten a home warranty, even that can come with certain stipulations and restrictions that might have you spending money out of pocket for repairs. At minimum, it’s a good idea to keep at least three months’ worth of expenses in an emergency fund. This will make things a bit more comfortable in the event that you lose your job or can’t pay your monthly expenses out of pocket for any other reason. You might also dip into this fund if you decide to do renovations at some point. Just be sure to replenish the fund as quickly as possible to keep that cushion in place.


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