I know so many people on the fence about whether or not they should continue to rent or if they should go ahead and jump into the world of home ownership. It's a big decisions. Today I want to go over the positives of each. I hope the discussion helps you weigh the choice in your own unique circumstances.
The Benefits of Home Ownership
1. Real Estate Values Appreciate Over Time
It's common knowledge that in the long run real estate values continue to increase. We go through downturns, but so far we always come out of them stronger. If you are renting a place the increase in values will increase your monthly rent over time. That means that every month and year that you rent you are paying more towards your landlord's mortgage, increasing his equity.
If you own a home, that increase in value is yours. You are the beneficiary of all property value increases.
2. Tax Deductions
You can typically deduct mortgage interest and property taxes from your income taxes. This is a great benefit of home ownership. To see how it could affect you personally, speak to your own tax accountant.
3. May Not Need As Much Down Payment as You Think
Many people believe that you must have 20% to put down on a house. While lenders love to have a large down payment, there are tons of mortgage programs out there that can get you into homes for down payments of 10%, 5%, 3.5% or even 0% down. It's much more affordable than many realize.
The Benefits of Renting
If you are renting, you have the flexibility to move as soon as your lease is up. You don't have to go through the hassle of getting a home ready to sell before you move. You give notice, you pack, you clean, you move.
2. No Maintenance Fees
When you rent and something in the home breaks, you don't have to fix it. The landlord does. Maintenance of a house is definitely an expense you have as a homeowner. You get to pass that on as a renter.
3. Future Uncertainty
If you have uncertainty in your near future of where you will be in the next year or two, homeownership may not be right for you. It's typically advised that if you will be in the same area for the next 5 years, owning a home is a pretty safe bet. If you sell a home less than 5 years after buying you may lose money when you take buying and selling costs into account. This isn't always true, but is a pretty good rule of thumb.
Which is better for you?
There is a lot to consider before buying a home. Hopefully today's discussion will help you hone in on what is the best scenario for you. Give me a call if you're ready to take that next step towards home ownership.