Buying vs. Renting

Buying vs. Renting

Buying a home is a huge decision, and there are a lot of factors that go into deciding whether a person should rent or buy. While both renting and buying have their benefits, it's important to decide on your own what's best for you. Listed below are the benefits of buying vs. renting:

Buying Benefits:

Tax Deductions – Mortgage interest and property tax obligations are fully deductible for both State and Federal taxes. Other tax benefits: in your first year you are able to claim the points (origination fees) on your loan, even if they’re paid by the seller.

Appreciation – While the market may change every now and then, homes generally appreciate over time and are considered a safe, steady investment.  The longer you’re in a home the more it appreciates, and statistics have it appreciate at the rate of inflation plus 1 or 2 percentage points.

Equity and Borrowing Power – Equity, which is the amount of money you can sell your home for minus what you still owe on it, is a huge benefit of buying. When you pay your mortgage payment, you reduce what you owe, and the reduction of your mortgage every month increases your equity. As you build equity over time, you can use the equity in your home to secure another loan, obtain a line of credit, or use it for emergencies or big-ticket items.

Stability and Savings Plan – Home owners know what they’ll be paying each month for the majority of their loan term, and those that have an adjustable rate mortgage have a cap and will be able to figure out the maximum mortgage payment. When you pay your mortgage each month, you reduce the amount of your loan, essentially building up more valuable equity in your home, which ultimately saves and puts money in your bank account in the long run.

Freedom – The home is yours. While you pay the bank a small amount each month toward your loan, you own your home. You make every decision regarding your home, and while some homes are in communities with HOAs that might govern what you can and cannot do with the outside of your home, all interior decisions are up to you – not your landlord. 

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Renting Benefits:

Less Responsibility – The responsibility of the rental property is on the owner, not you. Minor maintenance (changing the filter on the AC unit or changing light bulbs) is up to you, but major repairs and changing appliances is the owner’s responsibility.

No Debt or Financing – Renting doesn’t require a large mortgage loan – you’re only responsible for the monthly rent and utilities. Renting also avoids the long, drawn-out process that comes with applying for a loan and the interest rates associated with a mortgage loan.

More Freedom – Renting gives you the freedom to move or stay once your lease is up.

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