by June Bloom
Home buying earned a poor reputation in some quarters after the last market crash. After all, the mortgage crisis left many homeowners owing more than their homes were worth. Still, for many Americans, buying a home is better than renting. Here are 14 reasons why:
#1 You Don't Have to Deal with Landlords
Anyone who has ever rented an apartment or a home has a landlord story. Not all landlords are bad people, but the fact is, if you are dependent upon another person for your living arrangements, it can lead to problems.
For example, it can take weeks to get the dishwasher or toilet fixed. Or, the landlord may decide to sell the home at the end of your lease when you have no desire to move.
As a homeowner, you are in charge of your fate, as long as you pay your mortgage.
#2 Rent Can Go Up While a Fixed Mortgage Cannot
If you get a 30 year mortgage, you can lock in what are in 2016 very low interest rates for many years. You can lock in a low monthly payment that is a hedge against inflation. Meanwhile, if you rent, your payment can go up as much as 10% per year in some cases.
#3 Interest Rates Are Low
Interest rates have stayed low for years after the mortgage meltdown, as Uncle Sam has tried to encourage homeownership and economic recovery.
Also, home prices, generally speaking, have stayed low, although that is not the case in more expensive cities. Overall, Trulia reported last year that asking prices in the US declined .7%, while rents increased .5%. When you a buy a home, you have the opportunity to lock into a home loan with a fixed interest rate for 15 or 30-years. With rates still at a record low, it remains a great time to buy a house at a fixed rate.
#4 Owning Your Home Encourages Saving
You have to pay a mortgage each month so you are regularly putting money into the house. You are not as tempted to spend your money on frivolous items as when you are renting a house. Later on, if you sell the home, you can walk away with a substantial payoff, even if you have not paid the mortgage in full, even after you subtract the costs of owning a home.
#5 You Will Buy Less Furniture
Renters tend to buy more furniture as they move around as they need new items for the new space. People who buy a home and settle in for a long time will probably stick with more items for longer.
#6 Customizing Your Home
Do you want to add a wall in the unused living room of your home and make it an office? You can do that when you own a home. If you rent, you can't, or you will have to change it back to original condition at the end of your lease.
#7 Increasing Energy Efficiency
Whether you upgrade the air conditioner or install energy-efficient windows or add insulation, when you own your own home you can cut down on your electric bill. Some homeowners also elect to add solar panels or even add a more energy efficient roof. Obviously, as a renter, you cannot do any of these things.
#8 Buying a Home Improves Credit
If you pay your mortgage, that is! Mortgage companies report timely (and untimely) payments to the credit bureaus. Very few property management companies do so. Few things on your credit report show financial responsibility better than making on time mortgage payments.
#9 You Build Equity
Having equity in your home is very useful for homeowners. It can be used to pay emergency expenses or for your son's college tuition. Also, having equity in your home makes it easier for you to take out loans for other things. The bank will feel better about loaning you $25,000 to buy a boat if it knows you own a home with equity in it. Homeownership is one of the best ways for Americans to acquire wealth outside of their jobs.
#10 Homes Appreciate in Value
While buying your own home is not the best way over the long term to invest your money, it still will appreciate over time in most cases. For most homeowners, their houses appreciate on average 3-5% per year, which gives them the opportunity to grow their equity over time.
#11 Tax Savings
The federal government has written the tax code to be very friendly to homeowners. You can deduct all of the interest you pay on your mortgage, as well as your property taxes, and some of the points you paid to get your mortgage.
Staying in one neighborhood as a homeowner for many years will allow you and your family to build relationships in the neighborhood. This also gives your children the great benefits of social continuity and staying in the same school for years.
#13 A Feeling of Accomplishment
Purchasing a home is one of the biggest financial decisions most people ever make. For most Americans, owning your own home brings a strong sense of pride and accomplishment that should not be underestimated.
#14 Buying Can Be Cheaper
In some states and cities, buying a house costs less over the long term than renting. Of course, this can vary greatly depending upon the location. You should use a good mortgage repayment calculator to determine if that is the case for the home you are considering. Hopefully, seeing this long list has convinced you that buying a home is better than renting. Good luck with your home search! 9 Top Tools for First Time Home Buyers
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