Why Own A Home Instead Of Rent?
There are times when it is better for a person to rent, but most
often home ownership has many more benefits and advantages.
About 10 year ago a had a retired aunt and uncle who rented a
condo in Las Vegas. Uncle Jim (not his real name, but that's
what I'll call him) was a retired minister. Throughout his
career he and his wife lived in parsonages, which are homes
furnished by the congregation while they ministered there.
He and his wife told me that the biggest mistake they ever made
was not to invest in buying a home. In their retirement years,
when their other retired friends were living in homes that were
almost paid off and had appreciated greatly, Uncle Jim and his
wife were using a huge portion of their limited retirment money
to make expensive condo rent payments. They strongly cautioned
me not to make the same mistake they had.
Recent studies are showing that there are many benefits for both
the owners and the community for owning your own home, including
increased education for children, lower teen-age pregnancy rate
and a higher lifetime annual income for children. Besides these,
listed below are some of the primary advantages for owning your
own house.
More Stable Housing Costs
Rent payments can be unpredictable and typically rise each year,
but most mortgage payments remain unchanged for the entire loan
period. If the taxes go up, the increase is usually gradual.
This stable housing cost especially important in times of
inflation, when renters lose money and owners make money.
Tax Savings
Homeonwers can be eligible for signifigant tax savings because
you can deduct mortgage interest and property taxes from your
federal income tax, as well as many states' income taxes. This
can be a considerable amount of money at first, because the
first few years of mortgage payments is made up mostly of
interest and taxes.
If you need to refinance to consolidate other debts (an
opportunity you don't have if you are renting) the interest on
this is also tax deductable.
Equity
Instead of payments disapearing into someone elses pocket, home
owners are building equity in their own home. This is often one
of a person's biggest investment assests. Each year that you own
the home you pay more toward the principal, which is money you
will get back when the home sells. It is like having a
schelduled savings account that grows faster the longer you have
it. If the property appreciates, and generally it does, it is
like money in your pocket. And you are the one who gets to take
advanatge of that, not the landlord. You can then use this
equity to plan for future goals like your child's education or
your retirement.
It is Yours!
When you own a home you are in control. You the freedom to
decorate it and landscape it any way you wish. You can have a
pet or two. No one can pop in and inspect your home and threaten
to evict you.
Even young people, like college students out on their own, can
often benefit from home ownership. It puts them ahead of other
young people their age financially by helping with their credit
and giving them what is often an excellent investment. Often a
college student buying a home will rent the rooms out, and his
or her roommates end up making the payments for the house. When
the student is ready to move on, her or she can sell the home
(hopefully making a profit) or keep it as an investment and
continue to rent it.
Buying a home is an important decision. It is often the largest
purchase a person makes in his or her life. Home ownership also
comes with some increased responsibilities, and isn't for
everyone. There are some disadvantages to homeownership that you
should take into account.
Increased Expenses
Your monthly expenses may increase, depending on your situation.
Even if the monthly payments are the same, home owners still
have to pay property taxes, all the utilities, and all the
maintenance and upkeep costs for the home. Often you need to
supply appliances that were furnished with a rental.
Decreased Freedom of Mobility
Homeowners can't move as easily as a renter who just has to give
notice to the landlord. Selling a house can be a complex and
time consuming process.
Risk of Depreciation
In some areas with overinflated prices, there may be a risk that
the house will depreciate instead of increase in value, if the
prices go down. If you then sell the house, you may not get
enough money from the home to pay back your mortgage, and you
will still owe the mortgage company money.
Possibility of Foreclosure
If for some reason you are unable to make your payments, you
risk having the lender forclose on your propety. This can result
in the loss of your home, any equity you have earned, and the
loss of your good credit rating.
When considering home ownership, you need to weight the
advantages and disadvantages for yourself. If you are like most
people, you will find that homeownership is worth the risks and
disadvantages.