Good question. Why should you switch from renting to owning a home? After all, isn’t renting easier? Things get fixed for you. You might not have to pay for water or trash. If the water heater blows up, it’s likely your landlord will pay for it.
But is renting smart?
In most of the country, probably not. The price you’re paying to rent an apartment or home is most likely about the same as — or maybe more than — a mortgage payment would be. And you don’t get these benefits when you’re paying for someone else’s property:
Building equity: When you own a home, your monthly mortgage payments build equity over time. You also gain equity when your home appreciates, as prices rise in your neighborhood. Both increase your net worth, which helps to build your wealth. On the other hand, when you rent, your landlord is the one building equity and consequently increasing their wealth.
Stabilized payments: Rent payments increase over time, but with a fixed-rate mortgage, your mortgage payment won’t fluctuate. So, no matter how the market changes, you can rest assured knowing you have a stable, affordable housing payment.
Tax benefits: Real estate property taxes, interest, and origination fees may be deductible on your income taxes. This reduces your taxable income, helping you to save money at tax time.*
Fewer restrictions: Buying a property gives you the flexibility to choose your own wall colors, install carpeting or hardwood floors, get a pet, and make the changes that turn it into a real home.
Making a home, not just a house: Instead of moving from one location to another every few years, your home will be the place where you celebrate promotions, mark your kids’ growth in the doorway, celebrate holidays, and make the memories that will last you a lifetime.
*We are not a tax advisory firm. Contact your tax preparer or financial advisor for more information.