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Pros and Cons of Buying a House

Wednesday, September 13, 2023

Almost 66% of Americans own a home. According to the U.S. Census Bureau, about 75% of Americans between 55 and 64 years are homeowners. Among people aged 65 and more, the proportion of households occupied by owners is over 79%. 

While new buyers mostly come from younger generations, buying a home later in life is becoming more common because people retire later. According to Gallup, longer life spans and changes in Social Security payouts may have contributed to the increase in the average retirement age to 61, up from 57 in 1991. This trend is expected to continue. 

If you are considering homeownership, this post will help you evaluate the pros and cons of buying a house. Explore factors like equity-building and maintenance responsibilities to decide whether buying a house aligns with your goals.

A man smiling at a camera while sitting in the kitchen of his beautiful house enjoying his retirement

Why Buy a House?

For many people, homeownership remains the cornerstone of the American dream. Pride, security, and a sense of accomplishment are the feelings that often accompany having a home that’s truly yours.  

There are many practical benefits to acquiring a property of your own. However, there are also some potential pitfalls of owning a house. Here’s a brief overview of the pros and cons of buying a house.

The pros of buying a house:

  • Freedom to do as you want: You can hang the pictures wherever you want, paint the walls, or even move them. There’s no need to ask anyone’s permission. You have control over home improvements and upgrades. 
  • Equity-building: Your equity is the difference between the market price of your home and the mortgage. The equity grows as you repay your home loan.
  • Rise in value: Homes typically increase in value over the life of a mortgage.
  • Better credit score: It is easier for homeowners to get a loan for necessities such as a motor vehicle or luxuries such as a cruise trip.
  • Tax incentives:  You can claim tax deductions on mortgage interest and property taxes. 
  • Creation of generational wealth: You can pass your home to your children. 

The cons of buying a house: 

  • High upright costs: You will need ready cash for the down payment, closing fees, and other expenses. 
  • Recurring homeownership costs: You will be liable for paying property taxes. You may also need to pay homeowners association (HOA) fees. 
  • Maintenance and repair costs: These fall entirely on you and can be either minimal or hefty, depending on the state of your home and your DIY skills.
  • Slow return on investment: Buying a home is a long-term commitment. It takes several years to start building equity.
  • Market fluctuations: Although home prices historically tend to increase, there are no guarantees that the value of your home will not fall.
  • Limited flexibility: You may find it difficult and time-consuming to relocate.

Before deciding, carefully weigh the pros and cons of buying a house. While you can allow emotional pull to play a role, primarily rely on cold facts and figures.

How Much Money Do I Need to Buy a House? 

A home purchase is one of the most sizable investments you’re likely to make. The median home price currently stands at about $416,000. (Unlike averages, median values do not include the extremes at either end.) 

Most home buyers finance their purchase through a loan, but you still need ready cash for a down payment (between 3% and 20% of the purchase price) and closing fees (an additional 2% to 5% of the purchase price).

Factor in other costs associated with buying a house, such as the fees for an estate agent, a home inspector, or an estate lawyer. Don’t forget the expenses related to home ownership, such as maintenance, repairs, insurance, mortgage payment, and property taxes. When calculating how much money you need to buy a house, it’s crucial to consider how much it will cost you each month, not just on closing day.

Pay particular attention to your mortgage rate. Be sure to contact multiple lenders and shop around for the best deal. Even a tiny difference in the mortgage rate can translate into thousands of dollars. Currently, the 30-year fixed-rate mortgage averages at over 7%.

Aerial view of a suburb full of houses

What Credit Score Do You Need to Buy a House? 

A few people can afford to buy a house outright unless they sell the property they own. Typically, buying a house involves getting a loan. 

To be eligible for a home loan, you must fulfill certain conditions. One of the most important is a good credit score. 

National credit bureaus maintain credit scores. They look at your total debt (credit cards, auto loans, student loans, and so on) and your debt repayment history. A credit score based on these factors allows lenders to evaluate how likely you are to pay your mortgage.

Your credit score (or FICO Score) can range from 300 to 850. Generally speaking, you need at least a 620 FICO Score to qualify for a conventional home loan. A higher credit score may qualify you for lower mortgage interest rates and better loan terms. Some types of home loans, for example, government-backed VA loans, do not require you to meet a minimum credit score.

Your lender will also examine other factors, such as your income, total assets, debt-to-income ratio, and employment history.

Is it harder for people over 50 to get a mortgage? 

By law, lenders may not reject a loan application based on age. Still, they are less likely to approve a mortgage for older applicants. Your bank or other money-lending institution may not be happy about the length of time you are likely to continue receiving your present income or about the source of your earnings (for example, investment income is considered riskier than earned income).  

On the other hand, some criteria may favor you because people in their 50s usually have an extensive history of successfully handling credit.

The approved home loans for applicants over 50 usually have a slightly higher interest rate. You may want to opt for a shorter-term loan, even though it entails higher monthly payments. If possible, plan to repay the loan while still working so that you won’t need to put off retiring due to the mortgage burden.

Cheapest Place to Buy a House

Finding an affordable place to live is crucial for many people. Home prices range widely across the U.S. markets in one part of the country may be cooling off and heating up elsewhere. Although home prices have increased significantly in some areas, there are many regions where housing remains relatively inexpensive.

According to the Zillow Home Value Index, West Virginia, with a home value index of $155,148, is the most affordable state to buy a house in the U.S. Mississippi is second with $176,655, and Oklahoma is third with $198,995. Other states on their list are Arkansans, Louisiana, Kentucky, Iowa, Kansas, Ohio, and Alabama.

The lists of places with low-cost houses vary from source to source, depending on the period under observation and the methodology used. In any case, choosing where to move in your 50s or after retirement can’t be based only on housing affordability. Other factors are at play, such as closeness of family, general cost of living, taxes, availability of amenities and facilities, and job opportunities (if you plan to continue generating an income).

Best Time to Buy a House

The best time to buy a house depends on whether you are looking for the cheapest deals or the most comprehensive selection.

Buyers typically get the best prices in the autumn and winter. But that is also when the supply is at its lowest, so there is not much choice. You may be better off timing your purchase in August or September when prices often fall but the inventory is still high. 

However, nobody can accurately predict real estate trends. Your situation will determine the best time for you to buy a house. You are good to go when your debt is under control, your credit score is good, and you can afford a down payment and other costs of homeownership.

A retired couple having fun with a dog in their new yard after buying a house in retirement

Steps to Buying a House

On average, the process of buying a house takes about six months. The journey involves the following steps: 

  • Check your credit score: Go to Annual Credit Report to see whether you are eligible for a home loan. You’ll also be able to get FICO Scores generated by the three major credit-reporting bureaus, Equifax, Experian, and TransUnion. 
  • Review your finances: Decide how much you can afford to spend. Consider the down payment, closing costs, monthly mortgage repayments, and all other relevant expenses.
  • Find a real estate agent: A good agent can be helpful, but if you want to buy your new home yourself, analyze the market and compare prices of similar properties.
  • Get pre-approved: With a pre-approval letter from your lender in your pocket, you will know how much you can afford and be ready to make an offer as soon as you find a suitable home.
  • Start the home search: Tour the properties in your preferred neighborhoods.
  • Make an offer: Negotiate the price with the seller and make a formal offer.
  • Schedule an inspection: Find a licensed home inspector or ask your real estate agent to recommend one. If there are issues, negotiate with the seller on how to fix them.
  • Hire a real estate attorney:  Although not legally required in most states, an estate attorney is worth the expense. They will help to negotiate any issues that may come up and ensure all paperwork is properly drawn up and filed with the authorities. 
  • Secure your financing:  Submit the mortgage application (even if you have a pre-approval letter.). 
  • Purchase a homeowners insurance policy: Get a homeowners insurance policy before closing. 
  • Close and move in: Buyers typically have a final walkthrough a day before closing. On closing day, sign the paperwork and pay for your closing costs when buying a house. When the sale is recorded, move into your new home.

Relocate Smoothly with Shyft

After all that work you put into the house purchase, you will want a smooth and efficient move to your new home. That’s exactly what you get when you entrust Shyft with organizing your relocation. Shyft is a tech-powered moving platform that offers solutions to your individual needs.

Start your exciting journey by downloading Shyft’s moving checklist to help you prepare for your move and keep track of the whole process.

Then reach out to Shyft by filling in a short form online or calling 1-888-838-5981. You will be asked to download Shyft Next, the highly accurate moving app for iPhone or Android. When ready, schedule a video call with a Shyft Move Coach

During the video call, your Move Coach will compile your moving inventory list with the help of a virtual tour. There’s no need for physical visits. You just need to point the camera on your device at the items you want to move. Your Move Coach will also answer your questions about the moving process and advise you on the best options for your budget. After the virtual survey, you'll receive the inventory list. You will find that the list is impressively accurate at 95%. To achieve 100% perfection, refine it by adding or removing items and services as you see fit. 

When you are happy with your inventory list, approve it in the Shyft Next app. 

Your Move Coach will source quotes from reliable, Shyft-vetted moving companies. Shyft has a vast network of professional movers that can handle every type of relocation, from local to international, and provide any moving service you may require. 

You will receive three or more top quotes from different movers and comprehensive company profiles. Once you accept a quote, the price is locked in and cannot be changed unless you add or remove items or adjust the move distance. Just ensure you book your move before the quote's expiration date.

Your dedicated Move Coach will oversee the entire process, providing continuous support from start to finish, ensuring a high-quality service. Shyft is available to you seven days a week throughout the relocation journey. You can call Shyft if you have any questions or want to get a progress update. Shyft’s commitment to customer service will make your moving experience truly exceptional.

AARP members enjoy a fantastic discount of up to $250 every time they move, no matter where or how many times. Book your move now and let Shyft streamline your relocation journey, alleviate stress, and save you time and money. 

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