You’ve heard that owning your own home is better than renting, but do you know why?
Top reasons why buying is better than renting:
- Your monthly payments will likely be lower. When you first purchase your home, your monthly payment might be slightly higher than your current rent, but in the long run, your payments will stay exactly the same for the length of your loan (usually 30 years). With the rate of inflation and corresponding rising rent payments, you’ll save lots of money over time.
- Your mortgage interest is tax-deductible. At the end of each calendar year, your mortgage company will supply you with a year-end tax statement. This shows how much you’ve paid in interest for the year and you simply enter it as a line item on your Federal tax return. Depending on your interest rate and mortgage payment, it can really make a dent in what you owe the government.
- You’ll have a valuable asset. Barring any major and unexpected economic downturns, your house will maintain it’s value and likely increase in value over the years. You’ll have a tangible asset that will make for a great return on investment when and if you decide to move.
- You will build up equity in your home. As your monthly payments go towards reducing the amount of your loan, and the value of your home increases, the difference will be ever-increasing. This is called equity and you can usually borrow money against the equity in your home for a shorter-term loan called a Home Equity Line of Credit. You can use this money to make home improvements and repairs and for an emergency. And the best part is that any interest you pay on this loan is also tax-deductible!
- You’ll have closer and deeper ties to your community. People who own their homes are more likely to build connections within their communities. They care more about their neighbors and make friendships more often than those who rent, because of the transient nature of renting.