Homeownership has many advantages - both financial and personal. But buying a home is an important decision. Look at the benefits and the differences between homeownership and renting to better understand if owning a home is right for you.
What are the benefits of homeownership?
Tax savings.
You may earn significant tax savings because you can deduct mortgage interest and property taxes from your federal income tax and state income tax if you itemize your deductions. Speak with your accountant.
A more stable monthly housing expense.
Your monthly housing loan or mortgage expense can remain the same for the life of your mortgage, depending on the type of loan you choose.
Equity.
You may build equity in your home over the life of your loan, which allows you to plan for future goals like your child's education or your retirement.
Homeownership is not right for everyone. It may not be the right time in your life or you may not like the commitment associated with owning a home. Here are some differences between renting and homeownership:
Renters are typically free from maintenance obligations such as repairs or lawn care. However, a maintenance free townhome or condo may work for your lifestyle.
Homeowners often have more freedom in decorating, landscaping, etc.
Renters can move more easily and more quickly than homeowners and there are higher costs associated with buying and selling a home.
Homeowners have a financial investment and may build equity in their home.
Here is an example that might help you if you are still on the fence about renting or buying.
Let's say for this example you currently pay $800/month in rent and you have thought about buying a home for the past 2 years but have not taken the leap. In 2 years, you have paid $19,200 in rent. Money that you cannot get back - gone.
Now let's say that you bought a home 2 years ago for $133,000. Roughly, your mortgage payment would be $800/month (not including taxes, insurance, etc.). With $0 down and a fixed interest rate of 6% for this example, you would have paid $3,367.25 in principle in 2 years by making one monthly on time mortgage payment. $3,367.25 in principle does not count for the amount your home might appreciate in 2 years, making this number even larger.
This is just one example, but have we got you thinking? Contact us for help with your current unique situation!
