When it comes to getting a place to live, we are often torn between the options of either owning our home or renting a place. Making this lifetime decision comes with considering which of the choices is wise and a worthy investment plan. In other words, which one is an asset and not a liability? To help allay your fears and ease your decision making, below are some pointers to why buying a house is better than renting one.
Paying for your home by obtaining a mortgage can come in different forms but the most common type of mortgage is a fixed rate mortgage. Gone are the days of 2008 where homebuyers would be enticed by a low monthly payment only to have the payment skyrocket after the first year of homeownership. With the fixed rate mortgage, the interest rate remains the same throughout the term of the loan. This provides stability in terms of paying equal monthly disbursements over the years, therefore giving you peace of mind because you can adequately plan for it. Meanwhile in the case of rent, landlords can change monthly payments upon renewal of a lease agreement. All too often rent payments in the Tampa Bay area increase by at least $100 per month with each lease renewal.
When you rent a house or apartment, the lease comes with numerous rules, regulations, and complicated contracts. Sometimes, such agreement could be as limiting as not changing the paint or having to pay an extra $300 per month for a pet.
The good news is, restrictions are eliminated when you own a home. This is of huge importance because you have the ability and the liberty to add value and remodel your home as you see fit till it feels like home to you.
It is often very costly to break a lease in order to move. Most apartments will either charge you the monthly rent until someone else moves into the unit or you must pay two months of rent to break the lease. This can make it very difficult to move out of your rental situation.
With owning a home, if you find yourself needing to move, you can pack up and leave whenever you want, and you wouldn’t even need to sell your house. Many people keep their home and rent it out to someone else and profit from the rent. Even if you break even renting the property out to someone, your renter is building equity in your home so you can do a cash-out refinance or sell the property to get money in your pocket in the future. Think of your home as a giant piggy bank. The more you, or your renters, make monthly payments, the more you can access later as the house increases in value.
3. Perfect Investment & Store of value
Why is owning a home a perfect investment? It is because it makes a much better return on investment (ROI) than other large buys such as a car. Owning a car is more of a liability than it is an asset. A car starts to depreciate, or lose value, once it is off the dealer’s space.
Homes often increase in value and are an effective way to build your net worth. In the Tampa Bay area, the surrounding suburbs are rapidly expanding because Tampa is a fast-growing city with many job opportunities. Because Tampa is growing so quickly, this creates demand for housing which increases the value of houses. When you own a home in this area, you own something that other people will pay a lot of money for. Click here to see how quickly homes in Tampa Bay are increasing in value!
4. Reduction in Tax
Some expenses are tax deductible while paying for your mortgage. If you bought your home after 2017 and your mortgage is below $750,000, you can deduct the interest from the mortgage on your taxes. As a home owner, part of your mortgage payment goes to pay off the interest on the loan, but the government subsidizes this purchase by making the interest tax deductible. There are few, if any, rent payments that allow you to deduct part of it on your yearly taxes.
5. Pride or ownership/ Psychological satisfaction
When you own your home, you have psychological comfort and meet societal expectations. In fact, you just fulfilled the “American dream”. The satisfaction you enjoy from owning your home affords you better integration into the community because you get to know the people around you. Also, through this, you build long lasting relationships with fellow neighbors and become more involved in the community.
The benefits of owning a home versus renting are beyond marginal. The joy of having a home to your name makes you happy and feel secured about the future because owning a home is beyond just having a place to reside.