Thinking about buying a home? It’s one of the biggest purchases you can make in life, so it’s important to understand the advantages to help you decide if it’s a smart financial move for you and your family.
Here are four reasons why buying a home may be better than renting.
- Financial Investment Versus “Lost Money”
When you rent, you are basically paying your landlord’s mortgage in exchange for a roof over your head. While renting may be an affordable living option, if you don’t own a home you may miss out on an investment opportunity that can grow with you into retirement. Why? Because over time, you can build up equity and your home’s value increases. So you not only have a place to call your very own, but an asset that you can borrow from, or sell if you want. Keep in mind that you’ll need to live in your house at least five years to recoup on your investment.
- Rent Payments Increase, Mortgage Payments Stay the Same
Unless you are renting in a rent-controlled area, your rent will go up over time, and you’ll need to pay higher rent, or move to a new home.
When you buy your home, you have more control. If you choose a fixed-rate home loan, your monthly payment will remain the same for the life of your loan. Keep in mind that while your loan payment may stay the same, your property taxes may increase, so you’ll need to plan for that. But over the long term, having a fixed monthly payment makes owning a home a more budget-friendly option than renting.
- Buying Allows You to Customize Your House
Sometimes it takes a little tweaking here and there to make a house a home. When you rent, you have little freedom to make changes.
Many landlords have strict requirements as to what you can and can’t change, and when you move, those changes will often need to be brought back to their original condition, or you risk forfeiting your security deposit.
Buying a home allows you to do whatever you like to your home to truly make it yours. You can change exterior paint colors, add on a patio, finish the garage … the sky’s the limit.
- Significant Tax Benefits1
As a homeowner, you are permitted to deduct your and property taxes on your income tax returns. The exact amount depends on your home price, mortgage rate and tax bracket, but the deduction can be significant.
As a renter, you are unable to take advantage of this tax deduction.
There are many benefits to owning your own home vs. renting, especially if you plan to stay in your home for a long period of time.
If you look at the purchase of a home as an investment, you can see how owning is a wise financial choice, and also offers more flexibility to make your house your own.
1. Please consult a qualified tax professional for tax advice on your specific circumstances.
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