There are a lot of things to consider when a change of residence is coming. One of the most important decisions you will make is whether to rent or buy. This can determine the area you choose, your monthly budget, how long you stay in the and put your life on a certain direction.
We all want to buy a home, but the truth is not buying a home is not always the best thing for everyone. Owning a home is a financial commitment which requires you to plan for the long term. It impacts your lifestyle and the savings that you generate over the years. Owning and renting have their benefits, but it all depends on which is right for you.
You could ask yourself:
How long do you see yourself in your next home?
How is your financial health?
How are your savings?
Are you staying at your current job for a long time?
Do you have kids and a dog that need more room?
This article aims to provide answers to these questions from the point of view of owning a home. Let’s discuss!
What are the benefits of owning a home?
Home ownership offers intangible benefits such as a sense of stability, substantial tax deductions and equity benefits. Home ownership provides a more permanent place for raising children and often provides the only way for people to have or build the kind of residence they want. Renting or buying is not just a financial decision; it is emotional, too – it feels good owning your own house.
Building equity: The difference between what you can sell it for and what you owe is your equity. When you pay down your mortgage, your equity is rising. Over time, more of what you pay every month goes to the loan balance than to the interest, building up more equity.
Federal tax benefits: You enjoy reduced tax and interest on home equity loans, property taxes and some closing costs when buying a home. The tax law changes raising the standard deductions and capping deductions that can be taken on state and local taxes, making it less likely to reap such benefits for younger people and those purchasing starter homes.
Desired taste: you can always renovate the house to your taste because you own it, that is a home ownership advantage not enjoyed by renters.
Robust long-term investment; the average home prices sold in the United States rose 28% in 10 years from 2009 and 10% from 2014 to 2019 as estimated by St. Louis’ Federal Reserve Bank. Even if the structure’s value itself depreciates, the land it sits on might become more valuable. Instead of investing in a property management firm, you should invest for yourself.
Stable monthly payments: A fixed-rate mortgage means you can pay the same amount for principal and interest monthly until the mortgage is paid off. Rents can rise at renewal. Yes, fluctuating property taxes or mortgage insurance can adjust payments periodically, but this typically does not happen as often as rents increase.
Stability: People tend to stay in a home they purchase longer, if only because it’s always challenging to buy, sell and move. Buying a house requires a certain amount of trust that you plan to stay for several years.
The good news? There is not wrong decision here! Make sure to speak with your agent and lender to talk through all the details and choose the best option for you!