The age old debate between renting and buying continues to roar on. While some people will tell you that a home is a massive responsibility and you’re better off letting someone else deal with the maintenance and repairs, the fact is that buying a home continues to be the better choice financially. Here’s a rundown of the benefits you get with owning that you lose out on as a renter.
Valuable Tax Breaks
The government wants to encourage people to settle down and invest in their local communities. Homeowners are more likely to do this, so they encourage home ownership by offering tax deductions on things like your property taxes interest. It can make a big difference on your tax bill at the end of the year.
Building Home Equity
Over time, the equity in your home will grow. This may seem hard to believe after real estate values have plummeted in recent years, but the fact is that you are putting money towards your future with every monthly payment. Assume you live in the same place for ten years. At the end of ten years renting an apartment, you will move on to your next place and hope to get your security deposit back. With a home, however, the numbers are drastically different. Between recovering home values and your monthly payments, you could net a substantial amount of money.
Another benefit of building home equity is that you can tap the equity if you should need it for an emergency or big purchase. Some senior citizens take the equity in their house and use it to buy a luxurious motorhome for traveling around in their retirement. This isn’t an option if you decide to rent for the next couple of decades.
Eliminating the Mortgage
While some homeowners choose to upgrade when they build enough equity in their current home, it’s actually better to stay where you are. You can live in an apartment for thirty years, and at the end of thirty years you will still owe rent every month. If you owned your own home, however, then you would pay off the mortgage and enjoy the benefits of living in a home for the cost of annual property taxes, insurance and repairs. While these expenses can add up, they are still far less expensive than rent.
Financial Stability and Security
Unless you are fortunate enough to get into a rent controlled apartment, you can count on your rent rising through the years. This is because landlords pass the expense of repairs, maintenance and even property taxes on to the tenants. You can move in today with an attractive rent of $1,000, and in ten years the same apartment could easily cost you $1,500 a month. When you buy, however, your mortgage payment will never change. While you might see a slight rise over time with property taxes and insurance, you won’t see the same high increases that renters face.
There are times when owning a home can prove to be disastrous. People who are overextended on the mortgage or have a home that needs extensive repairs often wind up filing bankruptcy and walking away from their hopes and dreams. This is why it’s vital that you make a smart choice when buying a home. Look for a home you can comfortably afford. It might mean living in a slightly smaller dwelling, but you will not have to worry about struggling to make the payment. If it needs work, you should have a definite plan for how the work will be completed and paid for. Staying within budget on both price and repairs will ensure that your home purchase is one you are always pleased with.
Geneva Hollis blogs about real estate matters for personalhomeloanmortgages.com. This site can help you find an affordable mortgage, so that you can stop renting an apartment and buy a home.