Homeowner’s Advice

There are many more advantages to owning a home rather than renting one, but in some cases renting can be a better decision for you. If you are moving or expect to be transferred in the near future, or if you want to first determine if a certain neighborhood is right for you, it may be better to rent before buying.

Owning your own home brings with it several distinct benefits, but also added responsibilities. It is important to ask yourself whether you are prepared to take on these additional responsibilities before you make the commitment to buy. For example, you will have to perform lawn maintenance, landscaping and upkeep of the exterior of your home, pay for any maintenance or repair work on your home systems or structure and comply with federal, state and local laws as they pertain to your property, including the payment of property taxes.

If you’ve established that you’re ready to take on the responsibilities of owning a home, you’re ready to reap the rewards. Home ownership provides significant financial benefits as a valuable investment. For example, the monthly mortgage payments you make once you’ve bought a home can act as a scheduled savings plan, helping you to gradually accumulate equity over time. Equity is a term lenders use to define your ownership interest in the property. From that equity, you can often borrow against its value, or convert it to cash by selling the house. Renters, however, lack the opportunity to build any equity, and continue paying rent to a landlord for as long as they live there with no lasting benefits.

Another advantage of owning a home is that the principal and interest portion of many mortgage payments remains stable throughout your repayment period, which is typically 30 years. So you’ll pay the same amount of money decade after decade, despite the effects of inflation. Rents, on the other hand, often increase on an annual basis. Homeowners also get significant tax benefits that are not available to renters. Most notably, the interest paid on your home mortgage is usually deductible, which in and of itself can save you a substantial amount of money each year in federal income taxes. And finally, homes typically increase in value over time. So it’s not unusual to find a house that was last sold ten or twenty years ago to be valued at much more than the original purchase amount today. And that appreciation value is equivalent to money in the bank for the homeowner.