Buying a home is a huge decision, and there are several advantages to buying versus renting a home. When making the decision between buying and renting, it is important to understand how home ownership can benefit you and your family.
Owning Builds Equity
A home is a valuable asset. When you purchase a home, you may take out a mortgage, and as you pay down your mortgage, you create equity in the property. Equity is the difference between the market value of the property and the amount of the mortgage. When the mortgage is completely paid off, you own the house outright. Historically, real estate has risen in value, which gives you a return on your investment over and above just paying off the mortgage.
The U.S. tax code allows homeowners to deduct mortgage interest from gross income, which results in lower taxable income. This may apply to mortgages on first and second homes as well as home equity loans, no matter what the money was spent on.
Itemising deductions is another benefit of home ownership. When you file your taxes, you have two options when claiming deductions that will lower your taxable income. You can claim a standard deduction, which is a flat amount that is determined by your filing status, or you can itemise your deductions. If you are a homeowner, itemising your deductions, including your mortgage interest, may result in a lower amount of income that is subject to taxes.
Control Over Costs
Taking out a fixed rate mortgage on a house allows you to lock in a payment that will stay the same over the life of the loan. Rent, on the other hand, is controlled by someone else and may go up each time you sign a new lease.
Freedom to Make Changes
When you own your own home, you are free to decorate things your own way with no need to get permission to paint the walls or dig a garden in the back yard. You can express your own personality and tastes, which can add to the quality of your life.
Control Over Maintenance
Maintenance of your property can be time consuming and expensive, but it also assures that problems will be addressed promptly and correctly. A home's appearance and upkeep affects the property value, and is a reflection of you. Having control over repairs can prevent the stress of reporting things over and over to a landlord.
Part of a Community
Buying a home in a community you love can provide a sense of stability that you may not find when renting. The investment of your time and commitment--to neighbours and community--provides a benefit to both your family and the people around you. This is an important aspect to consider when making the decision whether buying or renting is right for you.
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