The Pros and Cons of Homeownership for Millennials

Purchasing a home is a huge investment, and usually the biggest one someone will make in their lifetime. It can be overwhelming, but more and more young people are taking this step earlier in life. The millennial generation is now the largest group actively engaged in the housing market. There are many reasons why millennials should buy a home, such as building equity instead of just paying rent each month.

However, there are still some things to consider before taking the plunge into home ownership.

Pros and Cons of Homeownership for Millennials

• PROS. Those who purchase a home can invest their money and build equity instead of paying a landlord. You may believe that you cannot afford a mortgage payment; however, by taking out a loan, you are ultimately doing yourself a favor. Paying your mortgage is like paying rent, but the money you spend goes towards owning a larger share of your home. This equity is an asset on your balance sheet. Many young adults are finding themselves in the position of being landlords. They may have bought a fixer-upper to flip it, or they may have purchased a property to rent out while they live elsewhere. Whatever the reason, this new generation of landlords often finds that the role is not as simple as it seems. If you’re a millennial and buy a starter home, you can turn it into a rental property once you buy your forever home. This way, you can have an extra source of income from the rent you charge your tenants. Not only will millennials benefit from the increased job market, but they will also enjoy tax breaks associated with homeownership. The earlier a home is purchased, the more years of tax advantages the buyer will have.
• CONS. The biggest con of buying a home is that it is a huge financial responsibility. You are responsible for all repairs and maintenance, which can be expensive. Another con is that you are tied down to one location. If you want to move, you will have to sell your home first, which can be difficult, depending on the housing market. Lastly, you may have to pay private mortgage insurance (PMI) if you do not have a 20 percent down payment. This is an extra cost you will have to pay monthly, on top of your mortgage payment.

Conclusion

If you are considering a home, there are many things to consider. Buying a home is a huge financial responsibility, and you must ensure you are ready for it. You also need to be aware that you will be tied down to one location if you buy a home. If you want to move, you will have to first sell your home, which can be difficult depending on the housing market.

Another thing to consider is that you may have to pay private mortgage insurance (PMI) if your down payment is less than 20 percent of the home’s purchase price. PMI is an extra cost that will be added to your monthly mortgage payment.

Contact Your Chicago Mortgage Specialist Today!

MidAmerica Bancorp, Inc. offers a range of mortgages for first-time and returning homebuyers with low down payment options. If you are looking to buy a home in the Chicago area, you will be shopping not only for a home but also for a home loan.

We can help you open the door to homeownership by finding you a home loan in Chicago, IL that rightly fits your needs. We are also licensed in the states of Indiana, Florida, Michigan or Wisconsin. Contact us at (708) 237-4050 to schedule a consultation.