When considering buying vs renting a home, it is important to recognize that each case is different. You should seek personal professional financial advice for your specific situation. That said, there are several reasons that both from a financial and lifestyle point of view, owning might make more sense. Below are a few of the top reasons people buy instead of rent.
- You can take advantage of mortgage rates are at historically low levels. This means that the monthly cost to buy a home vs the cost of renting the same home make ownership much more attractive. Additionally, mortgage payments lock in at a fixed level where rental payments can rise (often as each lease or rental agreement is signed). Since the mortgage payment is the bulk of the owner’s expenses related to their home, having a mortgage payment that is fixed offers budget stability. Taxes and insurance are separate and often much smaller parts of the cost of owning a home that need to be taken into account as well.
- You can improve the property without asking permission and you can capture the return on those improvements. Even things as simple as light fixture upgrades, a fresh coat of paint, new flooring that provide a modern feel for the home cannot be done without the permission of the owner. And even if they could, you would not capture the return on that investment. Owning provides the opportunity to investing in improvements and profit from those investments (and to improve your lifestyle at the same time. )
- You can enjoy the appreciation benefits. While there is never a guarantee of future results, over the long haul, homes have historically risen in value. That both drives rental costs up and make a home an asset that typically rises in value while your mortgage payments make your stake in the investment grow.
- You can see tax benefits as well. Homeowners typically get to deduct mortgage interest and property taxes when they file their taxes. Again, this is something that you will want to go over with your personal financial advisor and seek their professional assistance, but for many people there are tax advantages to ownership.
- You can benefit from paying down your mortgage. Some people refer to this a "forced savings". I would classify it as "pain free savings". Here is the difference. Your are going to help pay down a mortgage (or provide a return if the home has no mortgage) one way or the other. (Either with your rent payment or your mortgage payment.) The only question is if you are paying down your mortgage or someone elses. Most other "savings" opportunities mean that you need to cut back on something else that you are spending in order to save. With home ownership, you are utilizing what you would have paid others to help pay down your mortgage.
Thinking about your own buy vs rent analysis? Let us connect you with the right mortgage professional and help you get the information you need. At today's low interest rates you owe yourself the opportunity to consider home ownership. Our Associates at The Real Estate Group help people make their dream homes come to life every day.