Suffolk Federal Credit Union logo

Buying a Home Introduction

In this topic, we cover:

  • Understanding the risks, rewards, and responsibilities of home ownership.
  • When renting can make more sense than buying - even if you have enough money to buy.


For Sale sign in front of a house.

If there's one purchase that should never elicit a serious case of buyer's remorse, it's your home.

A home is not only one of the largest purchases most of us will ever make, but much of your wealth will likely be tied up in your home. Research conducted by the U.S. Census Bureau has shown that home equity comprises the largest portion of the average U.S. household's net worth. So it's safe to say that buying a home is an incredibly important financial decision.

Money, however, is just part of the equation. A home is far more than an investment - it's the setting in which our lives unfold. Our homes serve as the backdrop to almost everything that happens to us, good, bad and indifferent. Many of your life's signature moments will occur within those walls.

Given the dollar amounts and financial commitment involved, it's not surprising that home buying isn't always a stress-free endeavor. Yet the process shouldn't fill you with anxiety or dread. In fact, if you're properly prepared, you might even find the home buying process to be an enjoyable challenge.

Benefits and Risks

Owning your own home can make a lot of financial sense, but only if you're fully prepared for it.

There are a lot of potential advantages to owning your own home. First of all, home ownership allows you to build equity (cash value) in your home over the years, money that is likely to be recouped when you sell the house in 10 or 20 years. Home ownership also offers the promise of dramatically cutting your expenses later in life - after your mortgage is paid off, you'll likely only pay real estate taxes and homeowners insurance. Finally, the interest on a mortgage is tax deductible, potentially saving thousands of dollars per year versus renting, though you should check with your tax advisor.

Sounds like a good deal, right? But owning a home is not without risk.

While home values for the country as a whole have generally risen along with the general rate of inflation, real estate is primarily a local investment. This means the values in some parts of the country may go up while the values in other parts may stay more or less the same (or even decline in value). The rate of appreciation even varies from town to town in the same state.

Owning a home means that you are responsible for all repairs, maintenance and upkeep – in addition to a mortgage payment. From mowing the lawn to painting the house to purchasing a new furnace, it’s all up to you. Especially if you're stretched financially with a large mortgage, finding the extra cash for unforeseen repairs can lead to financial stress and may even result in high interest credit card debt. As the equity in a home grows, homeowners are often able to take out low interest home equity loans to cover large expenses, but unless you made a large down payment, these low interest loans may not be available for several years after the purchase of a home.

And no matter what your financial situation may be, there are often times when renting actually makes more financial sense than buying. If you plan to move within five years or so, the costs associated with maintaining and selling a home probably make renting a better bet.

Whether buying a home is right for you is often a complex, personal decision that includes both financial and quality of life considerations. Our goal is offer a "big picture" look at the process, allowing you to ultimately complete the home buying process with a minimum of stress - and absolutely no buyer's remorse.