It’s a question most people think of at one point or another – am I better off renting or owning a home? The answer is often dictated by one’s financial situation and life circumstances.
However, for people who have the desire and the means, the choice is usually clear. Owning a home is almost always better than renting one, even when home prices and interest rates are rising. Here are just a few reasons why.
A Great Investment
One of the best things about owning a home is that it enables you to build wealth. Unlike rent, which vanishes into your landlord’s pocket each month, every mortgage payment you make increases your ownership stake in your home. It’s called home equity, and over time, it becomes a powerful financial tool that you can leverage for other investments or major life expenses.
Homeowners also enjoy tax incentives that renters don’t. For example, your mortgage payments go toward your loan principal and the interest on your loan. Those interest payments are usually tax-deductible, which can really help during tax season. Changes in tax laws can sometimes affect this benefit, but typically lawmakers are in favor of incentivizing homeownership, as it tends to help the overall U.S. economy.
Freedom and Enjoyment
Owning or renting isn’t just a question of dollars and cents, of course. There are plenty of other benefits, both personal and emotional.
If you rent a home or apartment, what you can do with the property is limited. You can’t decide to remodel the kitchen or personalize the space—at least not without the property owner’s permission.
But when you own your home, you can customize it any way you like. You can paint it, install new flooring, or even build an extra room or a backyard deck. As long as you comply with local building ordinances and any applicable neighborhood restrictions, you can tailor your home to your particular needs and wishes.
Homeownership also creates feelings of stability and security, which is especially powerful if you have children. Settling down in a community can provide your family with a consistent and enriching environment for their development. While your children grow up and may move away, they’ll know that there is always a home to go back to.
While your home equity increases as you pay down your mortgage, it also rises as your home increases in value. It’s true that home values can fluctuate year to year, depending on what’s happening in the housing market. But historically, home values have trended upward for decades. So, the longer you own your home, the more likely it is to increase in value.
We mentioned earlier how your home equity can be used to finance other investments. After years of homeownership, many people are able to use their home equity to finance their children’s college tuition or home improvements. Home equity can also be used as a down payment on a second home to use as a vacation spot or as an investment property.
Finally, owning a home enables you to leave a tangible asset to your heirs. Many people who were the first in their family to own their own homes have passed on this opportunity to their children and grandchildren, thus influencing the financial future of their families for generations.
Taking the Next Step
To be sure, renting has its advantages. Perhaps you haven’t yet decided where to settle down, or you’ve just started a new career and don’t know where it’s going to lead. Until you have certainty about these things, renting may make more sense.
But when weighing the decision to rent or own, it’s important to consider not just your current lifestyle and financial situation but also your long-term goals and aspirations. Owning a home provides a wide range of benefits that go beyond mere financial metrics. It can enhance your personal life, provide long-term stability, and offer the opportunity to build a financial legacy.
If homeownership is your goal – either today or sometime in the future – Right By You Mortgage can help. Just contact one of our local mortgage loan experts or drop email us at email@example.com.