The decision to buy a new home is a big one and is not one you typically make overnight. If you’ve started contemplating the possibility of giving up renting to make the move into your own home there are pros of owning your own home, as well as benefits of renting, to consider in the process.
Most people decide to move from renting to owning due to a life change such as relocation, a new job, someone is moving into or out of your current living situation, a new baby is on the way, marriage. No matter what life stage you are in, owning and renting both have benefits.
Benefits of Owning:
- Potential tax benefits
- Building equity
- Flexibility to make home improvements
- Mortgage payments are typically stable
- Putting down roots
- Personalizing décor and landscaping
- A place to call your own
Benefits of Renting:
- Landlord handles all repairs
- Renter’s insurance can be less expensive than homeowner’s insurance
- Utility costs may be lower
- Access to apartment amenities such as pools and fitness centers
- Moving from a rental situation may be easier than selling a home
Many renters think that they just can’t afford a new home. They are pleasantly surprised to find that a house payment is very comparable to their monthly rent, when considering the after tax equivalent. Initially, most of a new house payment is made up of principal, mortgage interest and real estate taxes (up to 90% of the monthly payment is some cases).Since these are tax deductible, the actual cost of the after tax equivalent mortgage payment is much less than you think. The exact amount is determined by your specific tax situation.
Nearly all of us pay a monthly housing payment. Some pay a landlord, others pay a mortgage company. In both cases that payment is building equity in the place where you live. The question is, whose equity are you building? Equity for you and your family, or for your landlord? Doesn’t it make sense to explore the option of owning your own new home?