Rent vs. Buy
Are you renting a home? If so, you may be wondering if it is better to buy. When buying a home, you will have several choices to make and many options to consider. For some people, buying a home can be very scary given the big responsibility both financially and emotionally. Since many people want to own a home in the United States, homeownership is often referred to as "The American Dream." Owning real estate is an excellent long-term investment and perhaps the number one source of wealthbuilding for families.
Homeownership has many benefits. Each month when you make a mortgage payment, you are building equity. As a homeowner, you can qualify for tax benefits that will assist you in dealing with your new financial responsibilities such as homeowners insurance, flood insurance, real estate taxes, and maintenance. But with the stability, security, and freedom that comes with owning your home, it can definitely be worth it!
Although homeownership is a huge financial commitment, it can be very rewarding. Your first expense is your "down payment" and closing costs, followed by years of monthly mortgage payments, real estate taxes, property insurance and maintenance costs. When you decide to purchase a home, you accept responsibility for paying these expenses.
At GARDNER, we have competitive loan options available through Movement Mortgage that can offer assistance to borrowers who have low down payments. Additionally, if the sellers agree to pay your closing costs, we can greatly reduce your out-of-pocket expenses. With the relatively low interest rates, your monthly mortgage payment can be less than rent in most cases.
Homeownership is not for everyone. One of the few advantages of renting is being free of most maintenance responsibilities and the flexibility of moving almost as soon as you decide. But by renting, you will not be building equity or taking advantage of the tax benefits available to homeowners. You will also not be able to protect yourself against rent increases and are not free to make changes to the home without permission. You may want to ask yourself a few questions before you make your final decision between renting and buying:
- How long do you plan to spend in a house and in a neighborhood?
- Do you enjoy lawn and garden work?
- Will your job require you to relocate?
- Are you ready for the challenge of homeownership?
There are many tax advantages to homeownership. As a homeowner, the interest you pay on your mortgage and any real estate taxes are tax deductible. In most cases, the amount of money a renter spends on rent can be about the same as or less than the amount a homeowner spends on a mortgage.
*The above is for illustrative purposes. Please seek professional tax advice from your Certified Public Account.