Buying vs. Renting

If you are one of the many families who now rent because they believe home ownership is beyond their budget, you may be in for a surprise. Owning a home is not as expensive as many people think plus there are a number of benefits that come along with owning your own home. While the benefits may seem overwhelming it’s import to remember that purchasing a home in the traditional sense is a long-term investment and should be look at on a min of 5 yr investment.

Appreciation
Unlike your rental unit, your home should appreciate over time where as the rent you pay is a sunk cost. Assuming an annual return of 4% over the next 10 years, a home purchased at $200,000 will be worth $296,049. According the National Association of Realtors the average home appreciation from 1968 – 2008. In comparison, if were to rent for the next 10 years at $1000 per month you will pay $120,000 in rent not including an annual increase in rent.

Build-Up Equity
Each mortgage payment made is buying a tangible piece of the property by paying down your principal balance, the amount owed on a home. By paying down your principle balance and realizing appreciation you are building up equity. Having a mortgage can almost be visualized as a forced savings plan.

Income Tax Benefits
Under current law, all interest and property taxes paid on your mortgage are tax-deductible. This is a realized savings that you will see at the end of each year by owning your own home, compared to renting which offers no tax benefits.

Trade-Up Value
Being that most buyers don’t initially have the means to purchase the home of their dreams, owning a home is a great way to start as opposed to increasing your income or saving for a larger down payment. Depending on the market, most likely you will realize an appreciation which can be eventually used for a down payment.

It Is Yours… and Yours Alone
Home ownership allows you to have freedom to do whatever you want to the home. You can paint the walls and make improvements without the hassle from your the landlord. Not to mention all the improvements made on the property will pay you back in one way or another.

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