Whether you’re considering relocating across town or across the country, you’ll be making one major decision about your living arrangements: buying a new home or renting. Signing a lease is certainly convenient in that there are fewer worries about maintenance or repairs. You simply contact your landlord, and he or she will solve problems according to the lease. But convenience isn’t the only factor, as you’ll see when you look at the many reasons buying is a better option for most people.
You’re making an investment that increases in value. Real estate has an excellent return on investment as compared to other assets, even if you do nothing to the place. But there’s more incentive to improve upon it when that property is the house you live in – and when you renovate, you add value. Typically, you’ll gain more than what you put into home improvements and you’ll reap the rewards when you sell.
There are tax advantages to buying versus renting. When you buy a home, you’re able to deduct mortgage interest payments when filing your income taxes every year. Plus, you can also deduct a number of expenses, so long as they qualify under the Internal Revenue Code. Energy efficient appliances, windows and other fixtures may result in tax reductions. In some cases, you’re also able to avoid federal taxes on the earnings when you sell your place.
Rent can go up, while a fixed mortgage won’t. Any time your lease term ends, you’re subject to increases that are decided upon by your landlord. When you buy your home, you’ll have the option of going with a fixed interest rate mortgage plan – which means your monthly payment will never go up or down for the duration of your loan.
Currently, interest rates and prices are low. The time to buy a home is now when you look at the state of the real estate market. Housing prices are low in many parts of the U.S. and interest rates are better than they’ve been in recent years.
Owning a home forces you to save. You’re less likely to splurge on unnecessary purchases and travel when you have a mortgage payment to consider, so buying a home motivates you to be more financially responsible. You have an incentive to make improvements on the place you call home, as your efforts will pay off more than a new TV or pair of shoes.
You can make your place your own. When you rent, you’re definitely limited in what you can do to add your personal style to the space. Many landlords won’t even let you pain the walls. As a homeowner, your only limit is your imagination.
While everyone’s circumstances are different, in most cases it’s better to invest in a home rather than rent. Many reasons are financial in nature and they’re certainly persuasive, but there are other advantages as well. For more information on the benefits of buying and how to get started with the process, consult with a mortgage professional.