Are you debating whether you should keep renting or buy a home? While renting has its advantages, there are many compelling reasons why buying a home is the better choice. In this blog, we’ll explore the advantages of homeownership in more detail and why buying a home is better than renting long-term.
1. Build Equity
When you buy a home, you’re building equity with every mortgage payment. This means that instead of paying rent to a landlord every month, you’re investing in your own future. I’ve managed to build a pretty good next egg by climbing the property ladder. Every time I sold my home, I was able to invest in a bigger or nicer place AND stash some money away into investments.
Over time, the value of your home can appreciate, providing you with a valuable asset that you can use to finance other investments or sell for a profit. Also, the profit on the sale of your primary residence is tax-free as long as you lived in the home for 2 out of the last 5 years.
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2. Financial Stability
Homeownership provides greater financial stability than renting. While rent payments may rise over time, mortgage payments remain the same (principal and interest).
If you pay for property taxes and home insurance through escrow in your mortgage, you may see fluctuations in your mortgage payment. Additionally, owning a home can protect you against inflation by providing a fixed payment that won’t fluctuate with the economy.
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3. Control Over Your Living Space
Owning a home is better than renting because you have complete control over your living space. You can paint the walls any color you like, make upgrades to the kitchen, or add a deck to the backyard.
You also won’t be as limited on the pets you have. Some landlords will only allow you to have a certain breed of dog under a certain weight. If you want to live in peace with your fur baby, owning your home could be better than renting.
This level of customization and freedom simply isn’t possible when you’re renting, as you’re limited by the landlord’s rules and restrictions.
4. Potential Tax Benefits
There are also potential tax benefits to owning a home. Mortgage interest payments and property taxes are both tax deductible, which can help reduce your overall tax burden. Additionally, if you sell your home for a profit, you may be able to exclude up to $250,000 ($500,000 for married couples) of the gain from your taxable income.
5. Long-Term Investment
Buying a home is a long-term investment in your future. While the upfront costs may be higher than renting, over time, your investment can pay off. The equity you build in your home can be used to finance other investments, such as a business, retirement, or college fund.
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You can refinance or take out a second mortgage on your home as you build equity, and the interest you pay can be written off on your taxes every year. Plus, you get to live in it so you are saving thousands of dollars a month on rent.
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6. Pride of Ownership
Finally, owning a home provides a sense of pride and accomplishment that renting simply can’t match. When you own a home, you’re investing in something that’s truly yours.
You have the freedom to decorate, renovate, and make it your own. This sense of ownership can provide a feeling of stability and security that renting can’t offer.
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Offset the Downsides
Of course, there are some downsides to homeownership as well. Maintenance and repairs can be costly and time-consuming, and you’re responsible for all upkeep and improvements to the property.
If that is a deterrent, consider buying a condominium or a townhome. When I was a young and single living in the city, a 1 bedroom condo was the way to go for me. I paid $195 per month in HOA fees and that covered all of the exterior maintenance, lawn care, gym, pool, and shared office space. If something happened inside of the building that needed fixing, then I could either call the condo handyman to come fix something or use home warranty insurance to help cover the cost.
It was as low maintenance as apartment living, but I was able to build equity and had a tax-free gain when I sold it 3 years later. Your first home doesn’t have to be your forever home and can help you pay for a bigger place when you’re ready.
Conclusion
Ultimately, the decision to rent or buy comes down to your individual circumstances and priorities. If you’re looking for stability, long-term investment, and the pride of homeownership, buying a home is definitely the way to go.
However, if you’re not ready for the financial commitment or want more flexibility, renting may be the better choice. There are still ways to make money in real estate while renting though! Check out my blog post on real estate investing with just $10.
Consider factors such as your financial situation, job stability, and long-term goals. Talk to a real estate agent or financial advisor to help you make an informed decision.
With careful planning and budgeting, buying a home can be a wise investment in your future. Get the Budget Blueprint below to get started saving for your home purchase!
Have I convinced you to start your home search?
