Trying to decide whether to rent or buy a home? It’s a big decision that calls for careful thought. Buying a home can be a great investment, but there are advantages and disadvantages of both renting and buying, so take time to carefully weigh your options.
Here are four reasons to consider buying instead of renting a home:
If your job is stable, and you expect to live in the same area for at least three to five years, buying a house could be a good financial decision. And when you have a family or pets, owning your home gives you more flexibility, more space and more privacy. Stability can also be important when you have children; when you own your home, they can attend the same schools over time.
When you rent, you can only count on your space and your payment amount for the duration of your lease; both can change when your lease is up. Once you own your home, it is yours to do with as you wish.
Contrary to what you might think, debt can be a good thing. Every time you make a mortgage payment, you’re building equity in an asset you own—an asset that will likely increase in value over time. Your investment can grow even more if you are willing to increase the home’s value by remodeling and making other improvements over time.
When you rent, you’re spending money that you’ll never see again. In addition, your investment costs are more predictable. With a fixed-rate mortgage, you will have a steady monthly mortgage payment over the life of the loan, so you’re free from unpredictable rent hikes.
When you buy a home, you can deduct your mortgage interest and property taxes from your taxable income, up to a certain limit. For example, if you buy a home between now and 2026, you can deduct the interest on up to $750,000 in mortgage debt used to purchase or improve the home. The cost of your mortgage insurance may also be deductible, based on your income.
But the biggest tax benefit of owning a house comes when you sell it, since the capital gains you realize from the sale are exempt, up to a certain amount. Always check with a tax advisor to take full advantage of the tax savings provided to qualified home buyers.
Maintaining a home can be a lot of work, but it can also be rewarding. When you own a home, you’ll have full control over the way you live your life. It’s your house—you can put in a garden or a dog door, paint the living room whatever color you want, build a deck or convert the garage to a workshop or art space.
You also have the freedom to sell whenever you please. Location is important; it’s the one thing about your house that you can’t change. So, take the time to make sure you get the house you want now and down the road.
When you buy a home, you make an investment in yourself and how you want to live your life. Consider the fact that if you pay your mortgage for 30 years, you’ll own a house; if you pay rent for 30 years, you’ll own nothing. A smart investment in a home can provide both financial and personal advantages. And at the end of the day, it’s a place to call your own. If you have good credit, low debt and money saved for a down payment, buying a home makes a lot of sense.
Check out our Should I Rent Or Buy? online calculator to help you compare the cost of renting versus the real cost of buying a home.
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