There is so much debate about Owning X Renting nowadays that I don’t even know where to start. I decided to simply bring 5 advantages for both sides, rather than a simple comparison. You can also check this post about renting later, but first here are 5 good advantages of owning a home.
Owning a home means more freedom and control over your property. You can paint the walls any color you want, decorate, make changes, demolish, expand the house and so on. You can use that to build a place that fits your personal tastes and needs, or perform changes and renovations to make it more valuable if you decide to sell it later.
It also becomes more important when your family grows as you have a pretty stable job and decide to put down roots where you live. This also gives you a better sense of security and stability for you and your family. Homeowners can take advantage of tax benefits and credit for future loans. There is also the possibility to rent later and become a landlord yourself, turning it into an extra income source.
No More Rents
One of the best financial benefits of owning a home is regarding rents, as you don’t have to pay them anymore. Recent researches have shown that the rent usually surpasses the value of a mortgage. You can easily accommodate your budget by having a fixed-rate to pay monthly, instead of the ever-rising rent that grows and gets a good portion of your income every year.
Depending on where you live, the value of a rant may be astronomic, and even skyrocket along with the inflation, reaching as much as 40% of your monthly income. Recent data also indicates that the rent will continue to rise, with no signs of stopping or stagnate, especially in big cities like New York and San Francisco. Of course, that rent offers a good convenience for those who move from place to place very frequently, but if you’re considering a long stay for a living, renting price is probably one of the first things to reconsider.
Home Prices On The Rise
The price of homes is increasing every year, making it a more promising and beneficial long term investment. The recovery from the recent crisis is becoming more evident in this sector, revealing an increasing rise of asset appreciation, far more than inventory. Just last year, there was an increase of 3.68% of home values, according to the data by Quicken Loans.
It is expected that the rise of demographics will boost the prices of house market even more in the coming years. Many are reluctant about the current condition of house sales and pricing, considering the economic recession in 2009. Paying for a house helps build equity, that can help with college, retirement, and other future spendings.
Lower Interest Rates
Another advantage for homeowners is the lower interest rates on a mortgage. Sure these can also rise, but the current expectations indicate that they will still low as they are for a while. This also brings back to the previous question of renting versus the fixed mortgage payment, considering the former is increasing at a much higher rate every year.
A rate drop is also a possibility, but not very certain on the current house market. The data suggest that it will stay low, at least until next year. Lower interest rates also help build equity, as you can deduct the property taxes from your income.
Build home equity is definitely one good advantage as a secure investment for future spending and emergencies. As you purchase a property with a down payment, you are also growing your capital, rather than simply giving part of your income to a landlord. The home serves as a tangible property on a real estate investment, which grows little by little, and eventually will pay off in the long run.
You can also negotiate the rates and down payment values when starting a mortgage program. Owning a property is one of the safest investments you can make, as your payments also build equity, something you can take back on necessity under its own terms and conditions. You can also evaluate and consider good terms when borrowing from your home equity.
If you have anything important to add on this issue, leave in the comments below so we can discuss in more details.