While it’s easy to simply re-sign your lease and avoid the hassles that come with moving, there are many benefits to buying a home that should be considered. From ownership pride to tax breaks, owning a home has advantages to renting.
1 – EQUITY
Homeownership automatically builds equity and creates a long term investment. Each mortgage payment increases that equity as opposed to rent which only benefits your landlord. Over time, your home is likely to increase in value, giving you a foundation for financial success. When the time to sell your home is right, the increased value can set you up for retirement or help you make a major investment.
2 – SAVINGS
With the exception of upfront costs such as the down payment and closing, you typically save money by buying a home. Rent not only pays the owner’s mortgage, but can also give them additional income. When you own a home, your monthly payment goes directly to your mortgage without markup and it contributes to your equity.
3 – TAX DEDUCTIONS
Once you purchase a home you may be able to itemize your taxes so that your down payment, interest and property tax are all deducted. These tax savings can put a significant amount of money back in your bank account.
4 – CREDIT
Making mortgage payments consistently on time builds your credit and shows lenders that you are a reliable, low-risk borrower. A strong credit history can help you secure loans in the future for major expenses such as car or home updates.
5 – PREDICTABLE PAYMENTS
When renting, your landlord may be subject to increasing your monthly payments or even ask you to move out with only 30 days notice. Owning a home gives you peace of mind and the ability to budget based on stable costs for as long as 30 years.
6 – COMMUNITY
A sense of pride is established in homeownership, not just in the home, but also the community. As a homeowner, your taxes benefit local schools and infrastructure and you have a say in changes within your area.
7 – DESIGN
When renting, any change to the house must be run by the landlord, but as a homeowner, you are free to make changes as you please. From pets to paint color to remodels, changes are up to your discretion and benefit your home equity.
Now that you better understand the benefits of owning versus renting, it’s time to consider the financials before you take the plunge.