Buying vs. Renting a House: Breaking Down the Benefits of Owning a Home
One of the most significant decisions that anyone can make in their life is buying a home. Renters often wonder, “what are the benefits of buying vs. renting?” There are many benefits of buying a house, such as being an excellent long-term investment. If you are planning on living in the same property for a few years or more, you may want to consider buying a home rather than renting.
You may be thinking to yourself, “I don’t think I financially can buy a house right now.” Just because you may think you can’t buy a home, does not mean that’s true. More and more millennials today are seeking out the benefits of buying a house. Taking advantage of the benefits below may have a positive impact on your long-term financial health.
Build Equity in Your Home
Paying your monthly mortgage payments is like buying a house on installment. Each month, a little bit more of the house belongs to you, and a little less belongs to the bank. At the end of the mortgage, you will own the asset free and clear. When you are renting, you are not building equity and there is a possibility that your rent may increase at the end of your lease.
Tax Benefits of Buying a House
One of the benefits of buying vs. renting is taking advantage of tax deduction opportunities. When you own a home, you can deduct the interest on up to $750,000 of debt used to acquire or improve your home.
Have Stable Monthly Mortgage Payments
One of the other advantages of buying a home vs. renting is having stable monthly mortgage payments. If you choose a fixed-rate mortgage, the monthly payment is locked in for the entire life of the loan. Renting is different. Tenants are at the mercy of their landlords, and rising rent over time is a fact of life in most areas.
Have the Freedom to Enjoy your Home
When you own a home, you have the freedom to make improvements or alterations to your property as you please. Your home will truly feel like home, as you can put your personal design touches on each room. Additionally, making improvements or alterations may improve the home’s value over time.
A Few Benefits of Buying a Home vs. Renting in Today’s Climate
If you’re considering whether to buy or rent this year, consider the following real estate trends to determine if buying vs. renting in this current climate makes sense.
Interest Rates Remain at Historic Lows
Mortgage rates have remained at historic lows from the end of 2019 and well into 2020. Many renters are taking advantage of these low rates as an opportunity to enter the purchase market. Numerous homebuyers, especially first-time buyers, have taken advantage of the low rates and traded up their city apartments for suburban homes.
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Suburban Home Values are Rising
Recent trends have shown a surge in demand in the Tri-state area’s suburban real estate market. People are looking for extra space for a home office or backyard for their kids to play. The increase in demand has caused home values to rise in some suburban markets. Of course, your home may be your greatest asset in life. As property values continue to increase in certain areas, now may be a great time to purchase a home and build equity.
Surge in New Construction Homes
As more people are looking to purchase homes, there has been increasing competition for the existing inventory. As homebuyer demand has increased, the suburban markets (specifically) have become more competitive. Thus, there has been a surge in demand for new construction homes. According to a recent CNBC article, “sales of newly built homes jumped 55% annually in June.” Therefore, now is an excellent time for new homebuyers to take advantage of the new construction home market.
As always, we’re here to advise you on what is best for your financial scenario. Give us a call today to learn more about if you or your client may benefit from buying vs. renting.