The Advantages Of Owning A Home?
- Greater privacy.
- Homes typically increase in value, build equity and provide a nest egg for the future.
- Your costs are predictable and more stable than renting because they’re ideally based on a fixed-rate mortgage.
- The interest and property tax portion of your mortgage payment is a tax deduction.
- There’s pride in homeownership, which also closely ties you to your community.
- Affordable options exist, like purchasing a lower cost manufactured home.
Advantages and Disadvantages of Renting a Home
Depending on your financial situation and preferred style of living, there are many advantages to renting:
- Renting a home can be cheaper than buying a home. Your payments tend to be lower than a comparable house payment. Also, your rent may cover utility costs (additional savings).
- You have more flexibility when you rent. Most leases are for 12 months. So, if your job requires you to move frequently, renting can be a desirable alternative to owning.
- Your landlord, not you, is responsible for performing nearly all maintenance and repair work on the property.
Financial Disadvantages of Renting
- There is no tax break for renting. You won’t be able to claim any deduction for mortgage interest and property taxes when you file your tax returns.
- Your housing costs aren’t fixed like they are with a fixed-rate mortgage. Your rent will most likely grow from year to year.
Here are the factors to consider when comparing buying to renting a home:
- Homeownership is not for everyone.
- Homeownership requires you to have a stable or growing income.
- Financial benefits of homeownership are long term. You should have a budget and a savings plan in place before buying a home. Owning a home is a big responsibility.
- Your credit score will impact how much you can borrow and at what terms. If you have substantial credit card debt, you may want to seek the help of a credit counseling agency and debt management program and pay your debt down, before applying for a mortgage.
If you are interested in becoming a homeowner, you should consider taking an online homebuyer education course to learn how to prepare for homeownership and get a better understanding of the home purchase process. Learn about the home purchase process, including how to finance and afford a home for the long term.