Are you still renting a home or apartment for yourself or your family? If so, you’re losing money. When you’re renting a home, you aren’t gaining any assets and there can be a lot of downsides to not owning a home.
3 Ways Renters Lose Money
1. You’re paying for someone else’s mortgage payment. You’re missing out on the appreciation that the property gives to the landlord. Appreciation is a term used in accounting relating to the increase in the value of an asset, which means in real estate terms, added value to the property. Over the past five years, houses appreciated significantly, making many new real estate investor multimillionaires.
2. Renters don’t get to freeze their monthly housing expenses as home buyers can. Of course, many home buyers get mortgage payments with adjustable interest rates and their payments go up over time. However, these payments will not go up over the long term like rising rents.
Just think about how much an apartment costs today compared to ten years ago. A two-bedroom apartment in Lake Elsinore, California leases for around $1,300 today. The exact same apartment rented for $325 in 1996 when it was brand new. Homebuyers who had low monthly payments in 1996, who did not refinance their mortgage, enjoy low payments and don’t have to worry about rising rents.
3. Renters don’t benefit from tax advantages. Homeowners get income tax deductions. Tax deductions for interest costs, for instance, save taxpayers thousands of dollars.
Emotional Satisfaction of Home Ownership
Besides losing out on making money with real estate, renters don’t get the same satisfaction of home enjoyment that benefits home buyers. Many landlords won’t allow you to paint your walls in colors that you desire. Also, you won’t feel like fixing up the property with custom window coverings and you get little say in flooring materials. Because you can’t make your personal statement, you won’t feel like you’re home as much as homeowners who feel emotionally connected to their property.
How to Buy Your First Home
The biggest barrier to homeownership is often accumulating funds for a down payment. People think they have to have thousands of dollars for a down payment. However, if you have good credit and a decent job, you can get a mortgage for a home with zero down. You can also finance some of your closing costs as well as ask the seller to help you pay a good portion of your purchase costs.
With today’s mortgage finance plans, you may be surprised to find out how much of a home you can afford with payments similar to what you currently pay in rent.
If you’re renting, make one of your priorities to buy your own home.