Renting vs buying a home header

Renting vs Buying a Home

Are you considering buying a home? You've probably heard how owning a home is part of "the American dream", haven't you? For most Americans the advantages of owning a home far outweigh renting.

Let's take a look at the advantages both renting and buying a home

Advantages of owning a home

  • You are building up equity when you own a home - This occurs because of two factors: The first is simply because the house increases in value over time. The second is every time you make your mortgage payment, part of it goes towards principle, so the amount you owe on the house goes down.
  • Tax advantages - The interest you pay on your mortgage every month is tax deductible. This means if you pay $10,000 a year in interest, you are reducing your taxable income by that amount, which lowers the amount of taxes you pay. This is a significant savings, especially since the typical mortgage has mostly interest charges the first few years of the term.
  • Pride of ownership - Let's face it, it feels good to own your own home! You can also remodel and redecorate it the way you want.
  • Stable and steady payments - With a typical mortgage your payment will not change year to year. However, it will change somewhat due to your escrow payments for taxes and insurance. Even so, it is more predictable and stable than renting.
  • Your credit rating - There must be a reason they always ask if you own a home or rent, right? That's because it helps your credit to own a home because statistically for lenders, people who own a home are a better credit risk than those who don't own a home.

Advantages of renting

  • Less maintenance work than a home. You probably won't have to mow a lawn, trim trees, shovel the walkway and fix the toilet.
  • Financially, it's easier to rent than buy a home. You don't have to come up with a big down payment like you would with a house. Typically, just a deposit equivalent to the first month's rent is all that is required.
  • When you want to move, you pack your things and leave. A homeowner will have to deal with the hassles of selling their house, packing, and working out where their next home will be, all at the same time! It's not unheard of for someone moving out of a house, living in a hotel room for 2 months because they are in-between houses.

If you can afford the down payment on a home and can qualify for a mortgage, owning a home is probably more advantageous than renting. The pride of ownership, the increase in your equity and yes, even the hard work of remodeling and gardening are very rewardable. At least they are for me!

What is the next step?

If you are going to buy a home, try America’s Lending Partners’ free loan request service that will match you with up to four lenders to help you lower your interest rate.

Good luck on your home purchase!

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