WHY BUY A HOME WHEN YOU CAN RENT?
Renting Vs. Owning
Renting a home has its advantages: you can move without selling a home first, you don’t have to make the repairs, nor do you have to pay property taxes. But something is missing. You lack a sense of security and ownership, or maybe it’s just the simple fact that the money you work hard to make is thrown into the wind as rent payments each month.
Whatever the case, you’re now in a spot where you want to take a step away from renting. But, you also wonder if there really are advantages to owning a home. Let’s explore the advantages.
Home Ownership Has Tax Advantages
- You may be able to exceed the standard yearly deduction, since the U.S. government permits tax incentives for homeowners. Check to see if your state offers that benefit.
- You receive a tax deduction for the yearly interest on your primary and vacation home – equaling a large amount of your total payments for the first several years.
- You can deduct the total amount of your yearly property tax bill.
- If you choose to refinance in order to consolidate other debts, your home equity loan interest is tax deductible.
Homeowner’s Cost of Living Is More Stable
- If property taxes and insurance go up, your monthly payments may as well, but the increases happen gradually.
- Renting fees can often be more unpredictable.
Your Investment Appreciates
- Most real estate increases value over time. If you carefully select your home and treat it well, your home will be worth considerably more in just five years.
- Your first investment in the house may be small, even three percent or less, but as the home appreciates in value, you are the one who benefits – not the bank, nor your landlord.
Each Month Your Equity Grows
- Even if the first few years of monthly house payments primarily cover interest, you are also paying more towards the principal amount each month.
You Have Control
- The house is yours.
- You can paint and decorate it as you wish.
- You can put nails in the walls and hang pictures and artwork wherever you desire.
- You can have a pet without consulting anyone else.
Renting Has Some Benefits
Renting definitely has benefits that cannot be overlooked. You can usually walk away from a rental at little to no cost with a 30 day notice. Renting costs also appear to be less per month. And you may not have to deal with the cost of utilities breaking or mess with mowing the lawn and keeping up the flowerbeds.
However, renting has deficits. In the end, you will have nothing but receipts to show for the money you poured into renting. Rent payments also elevate with inflation, where mortgage payments are fixed. Your redecorating and renovating options are limited when you rent, and even if changes are made, the landlord is the one that benefits. Your fear of not being able to pay the mortgage bill equally applies to renting because a lack of money in either situation means no roof over your head. Either way you have to pay someone for a space to occupy. And even if you have the money to pay rent, your landlord may ask you to leave for any given reason. After all, he has the ability to kick you out.
Even the thought of purchasing your first home can be overwhelming for renters. But the old saying remains true, “When you’re renting, you’re just throwing your money away.” The largest part of your paycheck will either go toward your mortgage or to your landlord. Maybe the time has come for you to start investing your hard earned dollars into a home. Think about it this way, buying a home is like putting money into a savings account.
The three main factors that you need to take into consideration when deciding to buy or rent are monthly expenses, rate of the property’s appreciation, and length of term that you plan on staying in that home.
First, realistically choose an option that you could rent and an option that you could buy. Then, sit down and list the expenses you will have for renting. Do the same for buying so that you can compare them objectively.
Next, find the appreciation rate of your desired home to try and determine what the home’s value will be in the future. This will help you see how your money is truly being invested. Check Case Schiller for the tables that show changes of house prices in your region.
And the last major factor that only you can determine is how long you plan on staying in that residence. Six months? Six years? 40 years? The longer you desire to hold a home, the less appreciation you need in order to beat renting.
What are the Advantages of Buying a Home?
- On average, home prices have gone up 7% over the last 30 years, making home buying a great investment.
- Your mortgage interest and real estate taxes are tax-deductible. So before the government takes taxes out of your paycheck, your house payment is subtracted, allowing them to only tax what remains. This saves you a lot of money.
- Your mortgage interest and real estate taxes are tax-deductible. So before the government takes taxes out of your paycheck, your house payment is subtracted, allowing them to only tax what remains. This saves you a lot of money.
- Your mortgage payment is fixed, rather than following inflation like renting.
- Interest rates are the lowest they have been in thirty years, making now the ideal time to invest.
- You will be able to enjoy the sense of ownership.
- You have the freedom to renovate and decorate as you wish.
- Over time your mortgage balance decreases and equity builds.
- You have stronger property rights, which gives you more privacy and control over who enters your home.
Don’t Have Money for the Closing Costs of the Mortgage?
Some sellers are willing to help with buyer’s mortgage closing costs in the form of concessions. There are programs available for first-time home buyers that meet all sorts of needs and offer incentives. Some programs offer down payment or closing cost grants.
If you have any questions or if I can be of any help with your real estate purchase or sale, please do not hesitate to call me.
Best wishes,
Brian LaDue
“Lakeside Property Store”
(586) 873-2242 Mobile
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