Advantages of Buying a Home

Everyone, at some point, should eventually consider buying a home rather than renting. Given that the reasonable expectation is that a renter’s payments will increase at a rate of approximately 4% per year, owning a home will help you attain your financial goals more easily.

While homebuying costs increase gradually over the years, a fixed-rate mortgage provides the security of knowing that the bulk of your monthly housing costs will never increase. The only housing costs that are affected by inflation are the homeowner’s property taxes, insurance, and maintenance, which comprise a much smaller portion of the overall housing expense.

The financial stretch to purchase a home will pay off in the future. There is a financial danger in long-term renting. For example, a current monthly rental payment of $750, with 4% inflation per year, will be a $3600 payment 40 years from now. If you are going to continue renting, be prepared for inflation and prepare your finances with the expectation of high payment increases.

Being a tenant in a rental property subjects one to the requirements of a landlord. Unlike homeowners, who have the autonomy to paint, decorate, and alter their properties however they would like, renters must adhere to the guidelines and restrictions set forth by their landlords. Not all landlords are prompt to make necessary repairs, either. Some are reluctant to make improvements and upgrades, but they will continue to increase rental prices every year. Renting can be risky, too, in that a landlord might suddenly decide to sell the property you’re living in and give you very little notice to vacate.

Home ownership is an integral part of your net worth. As the value of your home increases over the years, the debt you owe on your mortgage decreases. Even if your home value does not appreciate dramatically, you still have the potential benefit of being mortgage-free in your retirement years.

Home equity (the difference between the market value of a home and the outstanding balance due on it) can provide financial and personal security. A home’s equity can be borrowed from, and the loan interest is tax-deductible. While saving money is often difficult, homeowners have this option of equity loans to rely on, while renters do not.

Decide whether this is the time for you to buy, and consider how the advantages and disadvantages of homebuying apply to you.