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Home Ownership
Benefits of Home Ownership
Buying a home is a big financial decision. And whether it’s a condo, townhouse or single-family residence — new construction or a home with a history — this transaction will have a significant impact on your budget. While your costs may increase, owning a home allows you to earn equity and build wealth.
Thinking of Buying a Home?
Finding a home can be an exciting experience, but you need to do your research first. There are several things to consider, such as how long you plan to be at your residence and what works best for your financial situation before making a purchase.
If you purchase a home in a subdivision, planned community or condo, you may be obligated to pay a Homeowners Association (HOA) or Property Owners Association (POA) fee. This fee may cover things like trash and snow removal, mowing and maintenance of common grounds and upkeep of shared facilities like a clubhouse, playground, tennis courts and swimming pool. HOA fees vary greatly depending on the community, so they need to be considered in your decision. If you live in a state with high property taxes, you will also need to factor in this additional cost each year.
Planning for the Unexpected
Owning a home means you are responsible for maintenance and repairs. Understanding the lifespan of key elements of your home, such as the roof, HVAC systems, and appliances will help you plan ahead for when these items need to be replaced. Keeping an emergency savings fund will also help when something in the house needs to be repaired right away.
Pros and Cons of Buying
Most importantly, buying property builds equity, meaning you are investing money into a home that should increase in value over time. You are aware of your monthly payments through your mortgage agreements. You may even qualify for some tax benefits. Owning a home also provides certain freedoms like allowing you to change decor and landscaping without permission and not having to be dependent on a landlord to maintain property. Homeowners tend to stay longer than renters so you will build a sense of community, stability, and security. On the flip side, you will have less mobility than with renting, meaning if you want to move you will likely need to sell your house first. Other challenges include that you are responsible for maintenance costs and property taxes. You need to keep up with your mortgage payments or you could be at risk of foreclosure or losing equity.
Pros and Cons of Renting
Renting may be a better option for some, because monthly rent payments may be lower and there is little or no responsibility for maintenance. Aside from following the terms of a lease, you can vacate a rental property making it easier to move. However, renters do not have any tax benefits, and they don’t build any equity.
A landlord will control rent increases which may be too much and lead to a possibility of eviction. Buying vs. renting a home is a personal decision and should be made after doing budget planning and research to see what makes the best sense for you.
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Fair Housing Act (FHA)
The Fair Housing Act prohibits discrimination in all aspects of “residential real estate related transactions,” including:
- Making loans to buy, build, repair, or improve a home
- Purchasing real estate loans
- Selling, brokering, or appraising residential real estate
- Selling or renting a home
Under the Fair Housing Act, it is illegal to discriminate based on such items as:
- Sex
- Race or color
- National origin
- Religion
- Familial status, including children under the age of 18 living with a parent or legal custodian, pregnant women, and people securing custody of children under 18
- Disability, among other criteria
Frequently Asked Questions
Pros of Obtaining a Reverse Mortgage include the following.
- Supplemental Income – Reverse mortgages can provide tax-free income, which can help cover living expenses, medical bills, or other costs during retirement.
- Stay in Your Home – You can continue living in your home without making monthly mortgage payments, allowing you to age in place.
- No Monthly Payments – Unlike traditional loans, you don’t have to make monthly payments. The loan is repaid when you sell the home, move out, or pass away.
- Non-Recourse Loan – If the loan balance exceeds the home’s value, you or your heirs are not responsible for the difference if the home is sold for the appraised fair market value. The lender can only claim the home’s value.
- Flexible Payment Options – You can choose to receive the funds as a lump sum, monthly payments, a line of credit or a combination of these.
High Costs – Reverse mortgages can come with high upfront costs, including origination fees, closing costs, and mortgage insurance premiums. Reduced Home Equity – As you receive payments, your home equity decreases, which can limit the inheritance you leave to your heirs. Ongoing Expenses – You are still responsible for property taxes, homeowners’ insurance, and maintenance. Failure to keep up with these can lead to foreclosure. Impact on Benefits – Receiving reverse mortgage payments can affect eligibility for certain need-based government benefits, such as Medicaid. Complexity – Reverse mortgage can be complex and difficult to understand, requiring careful consideration and possibly professional advice.
No. Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (Title XI) generally requires credit unions to obtain appraisals for real estate-related transactions regulated by the NCUA. In 2020, the NCUA amended its regulations to require credit unions to obtain appraisals when originating residential real estate loans of $400,000 or more. Loans for less than $400,000 generally require written estimates of market value instead of appraisals. While written estimates of market value do not have to be issued by state-licensed or -certified appraisers, they must still be issued by individuals with qualifications and experience to perform such estimates.
Under Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, the Appraiser Qualifications Board (AQB) establishes the minimum education, experience, and examination requirements for real property appraisers to obtain a state license or certification. The AQB issues the Real Property Appraiser Qualification Criteria.
Appraisal discrimination is illegal under federal law and prohibited by professional appraisal standards. The Fair Housing Act and the Equal Credit Opportunity Act prohibit appraisers from discriminating against you. If you think you have been discriminated against, you can file a complaint with the state agency that regulates appraisers. To find out which agency to notify, contact the Appraisal Complaint National Hotline. The hotline doesn't handle complaints but will refer you to the appropriate authority. You may fill out a form on the website or call the toll-free number at 877-739-0096.
You may also file a complaint with a state or federal financial regulatory agency if you think your lender discriminated against you by relying on a biased appraisal. To submit a complaint against your credit union, please contact the NCUA’s Consumer Assistance Center or call 800-755-1030. You may also contact the Consumer Financial Protection Bureau at https://www.consumerfinance.gov/complaint/ or call 855-411-2372.
You may also file a fair housing complaint directly with HUD's Office of Fair Housing and Equal Opportunity, online at https://www.hud.gov/program_offices/fair_housing_equal_opp/online-complaint or by calling 800-669-9777.