For many people, owning a home makes more sense financially and from a lifestyle perspective than renting a home. Below are the top reasons people buy instead of rent.
1. You Can Do Anything You Want With the Property
Owning your home means you can change any aspect of the house you want without having to worry about putting it back as it was. Its an opportunity to customize your way with your own style! And sometimes, making these home improvements will increase the value of your property.
2. Appreciation Benefits, Including Leverage of Cash Invested
Owning a home is an investment many people can understand better than buying stocks, because they get the tangible daily lifestyle benefit of living in the home. But the financial benefits are also significant, and can be more substantial than stock investing. As a home appreciates, it accrues faster than a stock might because you get the appreciation on the entire home’s value, not just the gain your down payment cash invested.
3. Tax Benefits
Homeowners are allowed to deduct mortgage interest and property taxes when they file tax returns each year, this significant savings from tax benefits can often make owning the same as, or cheaper than, renting.
4. Mortgage Costs Stay the Same as Rents Rise
If you get a fixed-rate mortgage on a home purchase, your mortgage payment can never change. Unless a renter is in a rent-controlled building or neighborhood, their rent is at risk of rising every year. Since the mortgage payment is the bulk of the owner’s housing payment, this creates a lot of budget stability.
5. Forced Savings
When a homeowner is making a mortgage payment, a portion of that payment is paying the loan down each month, giving the owner more equity in their home. Using the example of a $300,000 home purchase with 10 percent down, the average pay-down per month in the first year is $423, and the average in the second year is $438, and the average pay-down per month keeps rising each year. This loan pay-down each month is required as part of the mortgage payment, but it’s the owner being required to invest in their own home, so it’s like forced savings that benefits the owner — whereas the entire portion of a renter’s monthly payment is going to a landlord.
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