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Open Collection of Student Writing (OCSW)

Buying a House Project Observations

Buying a house isn’t easy, especially having to choose whether to get a loan for 15 or 30 years. Before choosing, you should think about what is more convenient and affordable. Take a look at how much you get paid and if you can support high or low payments. You shouldn’t choose a house/condo that costs more than you can afford, it will stress you out when you have no money to pay the monthly payments. Another thing to consider when deciding what loan you want is how much you’re spending on other bills and/or needs. What are the reasons why you should rent or buy a house/condo? Are there any risks or rewards when investing in real-estate? Lastly, what are the tax advantages of buying a house/condo?

First of all, I will discuss the advantages of a 15 and 30-year loan. When deciding to get a 15-year loan, you are probably deciding to get it because you get to pay the loan quicker with a lower interest rate, which means that you are going to save money by paying less interest. Another advantage with a 15-year mortgage loan is the fact that it helps you build equity faster since you’re paying less interest and more money is going towards the principal. The payment amount does not increase with a 15-year loan. What about a 30-year mortgage loan? What are its advantages? A 30-year loan is easier to pay because of the lower payments, which makes it easier to not miss a payment. Having a low payment could make you worry less than not being able to afford the payments.

Unfortunately, both 15 and 30-year mortgage loans also have disadvantages. Let me begin by telling you the disadvantages of a 15-year mortgage loan. The loan of a 15-year mortgage has a higher payment and could cause you to miss a few payments if you can’t afford it or if you’re on a personal budget. Once you sign for the loan, you’re required to make those payments. Like a 15-year mortgage loan, a 30-year loan also has disadvantages including a higher interest rate, payments could increase at any moment, and you pay more than what the actual house itself costs.

Next, there are several advantages and disadvantages of renting versus buying a house/condo. Renting a house is good and bad. First off, you can’t have any animals in most places when you’re renting, you can’t hang pictures where you want or paint it, you can’t have parties because of noise, there aren’t enough parking spaces, your rent increases when the owner wants it to, give a security deposit, laundry (most places you rent don’t have laundry machines), having close neighbors, and you don’t get enough privacy. Although, there are all those disadvantages when renting, the advantages include: cheaper payments, rent may cover utility payments, more flexibility/mobility, you’re not required to perform all of the maintenance, and you have a short-term commitment not long-term. The complete opposite happens when you buy a home. When you purchase a home, you could have animals, you can paint your house whenever you want and hang pictures, you can have parties, you have the decision to choose a house that has a lot of parking space or not, your rent doesn’t increase if you get a 15 year-mortgage loan, you get more privacy, your neighbors aren’t that close to you as when you’re renting, it’s a good investment, build equity, and ownership. Like renting, buying a home has its disadvantages, including long-term commitment, having to repair anything that goes wrong in the house, you can’t move out if your job requires it (makes it harder), you have to pay a down payment, you’re in debt, and there is a possibility that the value of your house will not increase.

When investing in real-estate there are risks and rewards. One of the rewards with investing in real-estate is the fact that you don’t need a high degree like a master’s or a doctorate to invest, but you do need to know some information on it. Some other rewards include: there are a variety of options that you could invest in, you could get good returns from investing, it could increase in value over time, tax advantages, and you get to grow equity. The risks of investing in real-estate are: the market might go down, you might lose money, and you need to keep spending money to keep the property in good shape/maintain, might get into debt, and it costs a lot of money.

Another thing I want to discuss are the tax advantages of buying a house/condo. Mortgage interest could be deductible, the house price might go up and you could get more money out of it, and you can also deduct the local property taxes each year. Saving your receipts of any home improvement object could also be an advantage because once you sell your house, the cost of improvements made on your house could make the price go up.

Lastly, from completing this project, I have learned so much about buying a house, renting vs buying a house, risk and rewards of investing, and the tax advantages and disadvantages when buying a house. Before doing this project, I thought 30-year loans would have lower interest rates since they take longer to pay, but they have higher interest rates, which make you pay almost double the price of what the house costs. It helped me learn some of the advantages and disadvantages with both a 15 and 30-year loan. Although, I would prefer a 15-year loan, in the future, I will probably get a 30-year loan because I don’t know if I’m going to be able to afford to pay more. As I advance in my career, I will pay more towards the principal because it makes a big difference. I didn’t think it would make a big difference to pay one-hundred dollars more each month towards the principal, but I saw that it does make a difference. It also makes you pay less interest.

In conclusion, buying a house requires major decisions. Before deciding whether to buy or rent a house look at things like tax advantages, 15 and 30-year loans, and risks and rewards of investing in real-estate. Overall, you really have to look at what best fits your life to prevent problems of not being able to pay each month.
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