5 Reasons Why Owning a Home is Better Than Renting
Introduction
As a loan officer I am always surprised at how many people still want to rent when they can afford a home. I understand that renting has its benefits and in today's world it is scary with high interest rate, but ultimately the advantages of owning a home far outweigh the risks; it's a good way to build wealth and provide some stability in an uncertain world.
There are five reasons why owning a home is better than renting.
As a homeowner, you're likely to find that your home has appreciated in value. This means if you sell it later on, you'll get more money than what you paid for it. This is due to the inherent appreciation of real estate. The property tax costs and homeowner's insurance premiums are also tax deductions (in most cases). Your housing costs are fixed at one price per month. The mortgage payment stays constant over time while rents go up and down with inflation rates and other factors outside of your control. Finally, unlike renting where there is no security in place for long-term living cost stability or personal possession of assets—you have both when buying a home.
First, you can build equity as your home appreciates.
Your home is your most valuable asset. It can be used as collateral when you need a loan, and it will always retain some value no matter what happens in the stock market. The value of your home will also increase over time—which means that if you can afford to put as little as 3% down on a house, you'll have access to more money as your mortgage balance goes down. That's because each month, a portion of your dollars go toward paying down that principal rather than just interest charges (like with credit cards). After 30 years, this means that after paying off a $300k mortgage, you'll have well over $400k worth of equity!
Second, you can get tax benefits.
The mortgage interest deduction allows you to deduct from your taxable income a portion of the interest you paid on your home loan during the year. For example, if your annual mortgage payment is $10,000 and the tax rate is 25%, then you would save $2,500 in taxes by claiming this deduction.
Property taxes are deductible as well. While the federal government does not allow for a complete write-off of property taxes (with most states limiting it to an amount under $10,000), there are still deductions available at both state and local levels that can help offset some of your real estate expenses over time.
You can also exclude up to $250k ($500k married filing jointly) in capital gains when selling your primary residence if you have lived in it for two out of five years prior to sale.
Third, you have more freedom to decorate and customize your space when you own a home.
Finally, when you own a home, you have more freedom to decorate and customize your space. You can paint the walls any color you want! You can add a deck or patio. You might even be able to renovate the kitchen or bathroom. If you want to build an addition, such as adding another story or constructing a garage, it's possible with some extra time and money (and permits). Renting doesn't offer that kind of flexibility since each landlord has their own rules about what tenants are allowed to do in their property.
Fourth, your monthly costs will generally stay the same once you've gotten a mortgage.
Another benefit of owning a home is that your monthly mortgage payments are fixed. You won’t have to worry about rent prices going up, because you own the property outright. When you rent, however, your landlord can increase your rent at any time—and they often do!
In addition to this being a hassle in itself (can you imagine how much easier it would be not to worry so much about how much money you're spending every month?), it also means that if you plan on staying in one place for longer than a year or two and want to save up some money for other things like vacations or retirement savings, renting may actually cost more than buying over time.
In fact, according to Zillow data from 2018, homeowners spent an average of $938 per month on housing costs compared with renters who spent an average of $1,363 per month on their housing costs.* So even though homeowners had higher down payments than most renters—which lowers monthly costs—their total out-of-pocket expenses were still higher. This is largely due to taxes: as an owner-occupied residence rather than investment property (i.e., rental), mortgage interest paid on your principal residence is tax deductible against income while landlord expenses are not.*
Additionally, since selling your home may involve paying commissions and closing fees when selling through an agent instead of directly through private sale channels like Craigslist or Facebook Marketplace (which come with no commission fees), these extra costs could add up quickly if they weren't included in initial calculations regarding long term savings potential
Fifth and finally, owning a home offers stability.
Fifth, owning a home offers stability. You cannot be evicted, forced to move or pay rent. This means that if you want to stay in one place for the long haul (or even just for a few years), owning your own home is more likely to provide that security than renting one.
Owning also gives you more control over your living situation: You can make changes yourself whenever you want and don’t need approval from anyone else—which means no dealing with difficult landlords!
Conclusion
If we’re honest with ourselves, renting just doesn’t make sense. If you are thinking about buying a home, then get started with your search now by talking to me and getting pre-approved for a mortgage. The sooner you start looking for a place to call your own, the sooner you can enjoy all of the benefits that come with owning property.