Choosing to buy or rent a home is a major decision that can affect your lifestyle, financial health, and personal goals. Whichever option you end up choosing will likely depend entirely on your financial situation. While both require a steady income in order to make consistent payments, there are several differences when it comes to owning or renting a property. In this blog, we will explore the many benefits of owning a home verse renting.
Rent Continues to Increase
Over the past two years, the housing market has skyrocketed, causing rent to also increase as well. The housing shortage has forced many potential buyers into rental properties while they search for a new home or end up on the wrong side of a bidding war. According to this article by Fortune, rent prices jumped 12% last year for a one-bedroom apartment, hitting an all-time high. In January, the median price for a one-bedroom reached $1,374, and the median price for a two-bedroom apartment reached $1,698.
As a renter, you will always have to be aware that your rent could increase at any time, which could force you to find a new property with additional moving costs. When you own a home, your mortgage payments will remain fairly consistent and oftentimes cheaper than rent, and you will never be surprised by a landlord’s decision to charge more.
Interest Rates are Low
Another great benefit to owning verses renting is that interest rates are still historically low. What may seem like a small difference in your mortgage rate can make a large difference in your monthly payment. If you choose to lock into a low 30-year mortgage rate it could end up saving you hundreds of dollars each month for decades to come. If you get a fixed-rate, your mortgage payment may never change, except for slight fluctuations in homeowners insurance or property taxes.
More Tax Benefits
Owning a home doesn’t necessarily mean you just see long-term benefits over time. Homeowners can enjoy short-term savings each year with annual tax write-offs and mortgage interest payment deductions, along with other savings depending on your specific situation. These deductions overall can amount to significant savings. Taking advantage of these tax breaks can reduce your tax bill and end up making your home a more cost-effective investment in the long run.
Another benefit of owning a home is the ability to create a sense of community with the people around you. For a lot of people, renting is generally viewed as a short-term solution. For example, when living in an apartment complex, there will be a lot of neighbors you will never meet, with so many moving in and out that it’s often difficult to create a sense of belonging. When you own a home, you can put roots down in a neighborhood and form life-long friendships with the people around you.
Gain Equity and Build Credit
Home values have risen at a drastic rate over the past few years and are projected to rise at least 10% over the next year, making homeownership a profitable long-term investment. Increasing property values mean that all of the money you invest into your home will provide significant returns in the long run. Each time you make a mortgage payment, a portion pays down your loan each month and therefore gives you more equity in your home. Also, your credit score will be impacted in a positive way when you are able to make consistent, on-time payments on different types of loans.
Overall, choosing to purchase and invest in a home comes with many benefits long-term, and we believe it is something you should definitely consider over renting, especially in light of today’s high rental rate market. Our team at Marsh Landing Realty are experts in real estate and would be glad to talk you through the homebuying process. Contact us to get started!