There are times when it is better for a person to rent, but most often home ownership has many more benefits and advantages.
Why Should I Own A Home?
Recent studies are showing that there are many benefits for both the owner and the community for owning your own home. Including increased education for children, lower teen-age pregnancy rate and a higher lifetime annual income for children. Although these are all great pros, there are also more prominent advantages that stick out.
1) More Stable Housing Costs
Rent payments can be unpredictable and typically rise each year, but most mortgage payments remain unchanged for the entire loan period. If the taxes go up, the increase is usually gradual. This stable housing cost can be especially important in times of inflation, when renters lose money and owners make money.
2) Tax Savings
Homeowners can be eligible for significant tax savings because you can deduct mortgage interest and property taxes from your federal income tax, as well as many states’ income taxes. This can be a considerable amount of money at first, because the first few years of mortgage payments is made up mostly of interest and taxes.
3) Debt Consolidation
If you need to, you can refinance a mortgage loan to consolidate other debts (an opportunity you don’t have if you are renting.) The interest on this is also tax deductible.
Instead of payments disappearing into someone else’s pocket, home owners are building equity in their own home. This is often one of a person’s biggest investment assets. Each year that you own the home, you pay more toward the principal, which is money you will get back when the home sells. It is like having a scheduled savings account that grows faster the longer you have it. If the property appreciates, and generally it does, it is like money in your pocket. You are the one who gets to take advantage of that, not the landlord. You can then use this equity to plan for future goals like your child’s education or your retirement.
5) It is Yours!
When you own a home you are in control. You have the freedom to decorate it and landscape it any way you wish. You can have a pet or two. No one can pop in and inspect your home and threaten to evict you.
Buying a home is an important decision. It is often the largest purchase a person makes in his or her life. Home ownership also comes with some increased responsibilities, and isn’t for everyone. There are some disadvantages to homeownership that you should take into account.
1) Increased Expenses
Your monthly expenses may increase, depending on your situation. Even if the monthly payments are the same, home owners still have to pay property taxes, all the utilities, and all the maintenance and upkeep costs for the home. Often you need to supply appliances that were furnished with a rental.
2) Decreased Freedom of Mobility
Homeowners can’t move as easily as a renter who just has to give notice to the landlord. Selling a house can be a complex and time consuming process.
3) Risk of Depreciation
In some areas with overinflated prices, there may be a risk that the house will depreciate instead of appreciate in value, if the prices go down. If you then sell the house, you may not get enough money from the home to pay back your mortgage, and you will still owe the mortgage company money.
4) Possibility of Foreclosure
If for some reason you are unable to make your payments, you risk having the lender forclose on your property. This can result in the loss of your home, any equity you have earned, and the loss of your good credit rating.
When considering home ownership, you need to weight the advantages and disadvantages for yourself. If you are like most people, you will find that homeownership is worth the risks and disadvantages.