Should I Buy A Home Or Rent?
Buying a home isn't always the best move for everyone. But before you stay in the rent-trap, you should give some consideration to the benefits of owning rather than renting.
Here are eight reasons people choose homeownership over renting.
1. It’s a Good Investment
While home prices move in cycles over the short-term, if you stay in your home for a while, it could increase in value and give you a substantial return on your investment.
You also have to look at your investment NOT as the price of the home, but your down payment. If you made a down payment of $10,000 on a $250,000 home, and that home value increases by 5%, you've earned a $12,500 return on a $10,000 investment. It's called leverage!
Another thing to consider, if you're renting and have roommates, bring your roommates with you, which would cover a significant part of your mortgage payment!
2. It's Often Cheaper
With the current interest rates being what they are, and current rents in our area, your mortgage payment is almost always less than rent. (Use this mortgage calculator and check it out for yourself!
3. Mobility
Some people think that buying a home ties them down, for instance, if they wanted to take a job in a different city for a year. Owning a home gives you MORE mobility. If you're in a lease, you may not be able to sublet your apartment. But if you own a home, you can put a renter in your home while you're away, and let them pay your house payment!
4. You Build Wealth
When you subtract the amount you owe on your home loan from the total value of your house, the amount left over is called your home equity, which simply means the dollar value of the portion of the home that belongs to you (verses the bank).
5. You Enjoy Significant Tax Deductions
Owning a home can reduce the amount you pay in income taxes each year. Your mortgage interest and property tax payments may be deductible from your federal taxes, as well as many state taxes. Certain closing costs and loan discount points also may be tax-deductible. In the early years of your mortgage, when interest represents the bulk of your monthly mortgage payment, these tax deductions can put a significant amount of money back in your pocket. (Always consult with a tax professional on matters involving your taxes.)
6. You Build a Strong Credit History
When you buy a home and consistently make your monthly loan payments on time, it demonstrates to other lenders that you are a good borrower and the risk of you defaulting on a loan is low. This strong credit history will be helpful in the future when you need other loans for buying a car, making improvements to your home, or paying other major expenses.
7. Home Security
One of the downsides to renting or leasing is that the property owner has some control over your future. At the end of the lease, they can demand you move out of the property. As a homeowner, unless you fail to make your payments, you’ll never be evicted or forced to move out.
8. You’re Free to Create the Home You Want
Homeownership offers tremendous freedom to create a living environment that you have always wanted. You can own pets, paint rooms whatever color you like, make changes to floors and carpeting, and do all the things that make a house your home – all without having to get approval from a landlord.
Whatever decision you make, you want to have all the information so that you're making the BEST decision for you. Feel free to comment, and if you have any questions give me a call, I'm here to help!
Clay Ritter
Hope Street Realty, LLC