“America is a nation of homeowners.” Most people would agree that owning a home provides both financial and personal benefits. Home ownership gives you a place to call your own while earning equity at the same time. If you’re on the fence about your next move, below are six reasons you may want to consider owning rather than renting.1
Cheaper Than Renting
A recent article from MSN Money News explains that a few states like Wyoming, Montana, and Delaware typically have a higher number of available units per renter than other states. This drives down rent costs in these states, making renting more affordable. However, according to a gobankingrates.com study, it’s actually cheaper to own than rent in a majority of states. To determine whether it’s more affordable to buy or rent in your area, Todd Barton, CEO of Renters Warehouse in Atlanta, recommends totaling all rent costs and fees. Then compare that to the mortgage payment on an equivalent property.1
Rewards of Home Improvements
“One benefit of homeownership is the ability to invest in updates and upgrades that increase the value of your home. Even small things, like landscaping or painting walls, can add at least marginal value to your home.” In addition to the potential for making more money when you sell, you get to enjoy the benefit of living in a nicer place.1
Bringing In Extra Income
If you own a large enough house, you could rent out a room and bring in some extra income each month, maybe even cover your mortgage payment. If you live alone, then the company might be a welcome addition. Even if you don’t have the space to rent full-time, another strategy is to take advantage of websites like Airbnb, and rent out your property only when it fits your schedule.1
Taking Advantage of Tax Breaks
Many Americans would likely agree that one of the greatest advantages to owning a home is the ability to take a tax deduction on mortgage interest. “According to the Tax Policy Center, homeowners who itemize deductions on their taxes can reduce taxable income by deducting interest paid on home mortgages. Property taxes also are deductible.” In contrast, renters don’t get to enjoy the same perks.1
Predictable Housing Payments
With a fixed rate mortgage, your payments will remain the same throughout the life of your loan. Unfortunately, this is not the case with renting unless you live in a rent controlled building. When a lease expires or a new year starts, landlords tend to use these opportunities to raise rents. According to RealPage, a provider of property management software, rents went up 4.1% between 2015 and 2016.1
Home Values Appreciate
According to the MSN Money News article, “Owning real estate is a great option for people looking to accumulate wealth…real estate is an extraordinarily good forced savings and investment plan.” Since home values typically appreciate over time, you’ll likely earn some money by the time you decide to sell. Unfortunately, no such benefit exists with renting regardless of how long you live in one place.1
Using a Reverse Mortgage to Downsize & Free Up Equity
Did you know that a reverse mortgage can be used to purchase a new house? A reverse mortgage enables homeowners to use the equity from the sale of a previous residence to buy their next primary home in a single transaction with one initial investment (down payment). Many seniors use a reverse mortgage to downsize and free up their equity. Freeing up these funds increases their monthly cash flow and can help to supplement retirement income. In addition, downsizing to a more manageable home not only saves money, but can allow seniors to move closer to friends and family.
If you’d like to learn more about purchasing your next home with a reverse mortgage, please use our Reverse Mortgage Calculator or call 800-218-1415.
1 6 Financial Reasons to Buy a Home Right Now – msn.com, 11/10/16, by Megan Craig, http://www.msn.com/en-us/news/money/6-financial-reasons-to-buy-a-home-right-now/ar-AAjsmAc?srcref=rss&tc=eml#page=1.
Author: Meredith Manz