You’ve landed a good job. You’ve found a city you like. The natural next step is to buy a home.
But is that really the best decision for you? Should you invest the time and money in finding a home, securing a mortgage, and plunking down a down payment to become a homeowner? Would it just be better to keep renting?
The short answer is NO.
While renting offers certain freedom, buying a house is the clear winner when you compare and contrast the two living options. Diving deeper into renting vs. buying makes it clear why you should buy a home.
Buying Provides Set Payments
Your rent can increase every year, even if you’ve signed a lease. This jump can eat away at any raises you may earn and make it difficult to get ahead. When you secure a fixed-rate mortgage, your monthly payment on principal and interest stays the same for the life of the loan. Lenders, unlike landlords, won’t spring an unexpected increase on you that wreaks havoc on your budget. The only potential change to your monthly mortgage payment would be due to a fluctuation in property taxes or homeowners insurance premiums that have been included as part of your total mortgage payment.
Homeownership Offers Tax Benefits
Paying income tax is nobody’s idea of fun, and owning your home gives you several tax advantages. You can write off the interest you pay, as well as the real estate taxes. This may add up to hundreds of dollars of savings on your annual tax bill! In addition, there are certain energy-focused improvements you can make on your property that provides tax credits like solar water heaters and geothermal heat pumps
You Can’t Renovate A Rental
As a tenant, you have little control over how your place is renovated. Interior painting, structural updates, lawn maintenance, sidewalks, and parking areas are all out of your control and generally taken care of at the landlord’s discretion. Owning your house allows you to be the decision maker on how it looks and feels. Knock out a wall, install new cabinets, add a deck, or put up a privacy fence. With your own home, your space can be anything you choose.
You Can Borrow Against Your Equity
Paying rent every month never increases your financial stability. Once the payment is made, it’s gone for good. Monthly mortgage payments are different. Making payments and performing smart renovations on your home help to build equity, which, over time, can add up to tens of thousands of dollars. You don’t have to sell your home to tap into this money. Simply open a home equity line of credit (HELOC) to take advantage of the equity in your home. Use it to finance home updates, fund your child’s education, or go on that dream trip you’ve been yearning to take.
Homeownership Erases Fights with Your Landlord
Grouchy, unreasonable, and unresponsive landlords are frustrating and can hinder your ability to lead a calm, happy life. Buying a house lets you give all that stress up. You are the boss of your place and you can run the home as you see fit. No more getting permission to use a paint color or worrying about your toilet never getting fixed. When you own a home, you’re in control.
Low Interest Rates Are Available
Today’s market is prime for buyers who want to lock in a good interest rate. Being able to secure a low interest rate can save you a few hundred dollars a month on your payment. There’s no guarantee that rates will stay as low as they are now. Potential buyers who put off the decision might end up with higher rates, which means higher payments.
Owning A Home Builds Your Credit Score
Landlords don’t report your payment history to the three bureaus, so it isn’t factored into your credit scores. But lenders do. Getting a mortgage loan gives you a chance to make payments on time every month. This payment history is added on your credit report and helps increase your credit score. Over the course of two years, your credit score may increase by over 100 points because of prompt payment on your mortgage loan.
Paying Your Home Off Reduces Expenses
It may take several years, but eventually you will be able to enjoy a mortgage-free home! Once your mortgage is paid in full, you have a home that you can live in without any payments. Obviously, this never happens when you rent. Having a house paid off decreases your budget and gives you more money to add to your savings or frees up money to buy things you and your family need or want.
Selling A House Puts You Ahead
You may rent for ten years and have nothing to show for it when you move out. If you’ve paid house payments for ten years and decide to sell, you’ll likely make money. The amount you sell the house for less your mortgage loan balance is the cash you get to keep. You can invest it in another place, save it, or spend it. Whatever you decide to do with it, you wouldn’t have the money if you had kept renting.
Deciding whether to rent or buy is a big decision, and one you alone can make. If the thought of owning your own place appeals to you, do yourself a favor and talk to a professional mortgage lender. Find out your mortgage options, how much home you qualify for, and the down payment you would need to provide. Then, when you’re armed with all the information you need, you may discover that homeownership is well within your grasp.