Buying a House: A Simple Explanation of the Pros and Cons for Kids & Beginners

Buying a House / Home - Pros & Cons: Personal Finance 101 - Easy Peasy Finance for Kids & Beginners

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Introduction to Buying a House for Kids and Teens

This video explains the concept of buying a house in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about buying a home, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.

Suitable for students from grade levels:

• Kindergarten
• Elementary School
• Middle School
• High School

The topics covered are:

• How does buying a house work
• What are the advantages of buying a house / home
• Are there any disadvantages of buying a house / home

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How does buying a house work?

Buying a home gives you ownership of the property. Most people buy a home by taking out a loan, which is called a mortgage.

The down payment is usually 20%, so you would first need to save up 20% of the purchase price.

Once you have that, you work with mortgage lenders, realtors, lawyers and the seller to complete the home buying process.

You then make monthly mortgage payments, slowly building home equity over the next 15 or 30 years. After the mortgage is paid off, you fully own your home.

What are the advantages of buying a house / home?

There are many advantages to buying a home.

1. You build home equity over time. You also become eligible for a home equity loan or home equity line of credit, if needed.

2. Once the mortgage is fully paid off, you have peace of mind knowing that you fully own the home and don’t have to worry about monthly payments.

3. You have complete freedom to make any home improvements or decorate the home the way you like.

4. If you get a fixed mortgage, your costs are stable and predictable unlike rent, which is at the mercy of the landlord.

5. Homeowners may also enjoy tax advantages like deducting their property tax or mortgage interest.

6. Making timely mortgage payments helps improve your credit score.

7. Your home could be an additional source of income if you decide to rent it out.

8. A home usually goes up in value over time, increasing your net worth.

9. Last but not least, buying a home gives you a sense of stability and pride, and helps build strong community ties.

Are there any disadvantages?

Yes, there are some disadvantages to buying a home.

1. It has high upfront costs and lots of paperwork. In addition to down payment, there are other costs like realtor commission, application fees, attorney fees, closing costs, etc.

2. In addition to mortgage payments, there are other recurring costs like property taxes, homeowners insurance, homeowners’ association fees (HOA), private mortgage insurance (PMI) etc.

So while the mortgage payment may be lower than rent, the total cost of home ownership can be significantly higher.

3. To qualify for a mortgage with low interest, you need to have a high credit score, usually upwards of 680.

4. It can take up to 30 years for you to fully own the home.

5. As a homeowner, you are responsible for all repairs and maintenance.

6. Your home could decrease in value or you could be forced to foreclose if you cannot pay your mortgage.

7. You don’t have the luxury of moving at will – selling a home is a long, tedious and costly process and cannot be done quickly or often.

Is buying a house the right choice for me? Who should buy a house / home?

That’s an excellent question, Sooper Cooper. But that’s a topic for another time…

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Download Transcript: Ideal for Use by Teachers in their Lesson Plan to Teach Kids & Teens

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