For most Americans, homeownership represents the American dream. Owning a home comes with a sense of accomplishment and the feeling that you finally made it. However, many people prefer renting to owning. While renting offers flexibility, buying a home is the better option in the long run. The majority of Americans choose buying over renting. According to a report by the Home Loan Learning Center, about 69% of Americans own their home. If you are torn between buying and renting a home, consider the following advantages of buying.
Most people think buying is more expensive than renting due to high down payments and closing costs. However, according to Forbes, buying is 38% cheaper than renting if you make the traditional 20% down payment and have a 30-year mortgage. Renters pay their landlords every month. Homeowners pay off the house and own an asset. They live in their home for free, after the mortgage has been paid off.
Most homeowners have a fixed rate mortgage on their home. A fixed rate mortgage offers stability since the monthly payments do not change. On the other hand, renters have to deal with rents that may be on the rise. If you live in a rented house without rent control, landlords can raise your rent whenever they feel like it. With fixed mortgage payments, homeowners have stable housing costs, which helps them plan better.
If you are looking to settle in a particular neighborhood for a long time, buying real estate there would be better than renting. When you buy a home, you become part of a community and create lifelong friendships and connections. Your children don’t have to worry about having to make new friends and disruptions to their school year due to moving. Studies show that children who grow up in one home, with the same friends and surroundings, are more grounded emotionally and perform better at school.
Monthly rental payments do not build your net worth, but buying a home does. With every mortgage payment, you increase the stakes you have in your home until you finally own it outright when the mortgage is fully paid. This is called home equity, the difference between the value of the home and the outstanding mortgage balance. Home equity can even be used as collateral to secure other loans. Owning a home also acts as a sort of forced savings account. No matter how tight the budget is, you will always do your best to find enough money to make the monthly mortgage payments or else you risk losing the home.
Homeowners get to deduct mortgage interest and property taxes which can be thousands of dollars. These deductions help reduce a homeowner’s taxable income, lowering the tax liability. These tax benefits often make owning the same cost, or even cheaper than renting.
When you own a home, you have the freedom to do whatever you want with it as long as it is legal. You can paint the walls in whatever color you want, have extensions, renovate anything you don’t like, among many other things that renters are not allowed to do to their homes.
Written by DorrianGrey at iWriter.com