Every month that rent check is deducted from your account, you are probably asking yourself, “Is this worth it?” Renting certainly allows for some freedom and mobility when you are starting out on your own.
However, when you start to establish your career, your family, and your community, you may want something more.
The question then turns to, “Should I buy a house?” You may see friends laying down roots and want to emulate them. You may read about the value of real estate investing and be curious about how you might benefit.
If you are considering whether to buy a house or keep on renting, here are ten factors you should consider which may help you make the decision.
1. The Value of Equity
If you rent a house, you pay your landlord every month. When you leave, you have nothing left from the house except your memories.
Compare that to owning a home. You pay off a mortgage with monthly payments, boosting your credit score in the process. When you sell, if market conditions are right, you may make a profit provided you sell the house for more than you owe.
When you buy a house, you create an equity interest in the property which usually grows over time. It also allows you to borrow against the ownership interest, in case you need extra cash for home improvements and other expenses.
If you are renting a home, you are at the mercy of the landlord or whoever owns the building. If the homeowner decides they want to move back in, you are out.
If you are renting an apartment and the building’s owner decides to convert the apartments into condominiums, you may be out.
When you own your home, you call the shots. If you want to move out and sell, that’s up to you. If you want to stay there for the rest of your life and leave it to your children, you can do that as well.
3. Pride of Ownership
Home ownership is encouraged in the United States and conveys many advantages intended to make buying a house attractive (see below on tax and other financial incentives for owning).
There is also the emotional satisfaction of owning your own home. Pride of ownership motivates people to take good care of their investment. When you own instead of rent, you are more likely to take an active interest in gardening and landscaping, painting and home renovations.
If you stay in your home long enough to pay off your mortgage, you will understand the immense satisfaction of owning something “free and clear.” Your home is an asset you can share with your family for generations to come.
4. Tax Advantages
When the tax code changed this year, it reduced the amount of mortgage interest deductions formerly allowed. However, owning a home still provides more tax benefits than renting.
For example, you can still deduct a portion of your mortgage interest payments.
If you work from home, you can also take some deductions including a fraction of the mortgage and utility bills in proportion to the size of your home office.
If you rent out your home, you can deduct some of the expenses of maintaining the home as business costs.
5. Rental Opportunities
If you own your place, you can make money off of your property. You can own a house and not live in it at all, using it to generate rental income from others whom you select to live there.
If you own a home in a popular vacation spot, you can rent out the home for part of the year. People who own houses in luxurious beach resorts often earn enough to pay their annual property taxes just by renting out for a few weeks during peak seasons.
Many people choose to utilize platforms like AirBnB to earn further income from their homes. According to the National Association of Realtors, 61% of buyers count on rental income to pay down the cost of ownership.
6. Staking a Claim in Your Community
When you own your home, you become more interested in the surrounding community. You want the schools to be good for your kids’ sakes. You want property values to stay high in case you decide to sell.
You may find yourself becoming more invested in your neighborhood when you own, working with others to make sure the community is safe and orderly. You may become involved in municipal politics, civic committees, or community improvement efforts.
Many find getting involved in their neighborhoods to be satisfying both personally and economically. Bettering the neighborhood also serves to make your house more attractive to future buyers.
7. Real Estate in an Uncertain Economy
While the U.S. economy is considered strong, this past year has seen great volatility in the stock market. Some experts are even predicting a recession.
Owning real estate is always a wise investment, especially when stocks and bonds are fluctuating in value. Depending on the housing market in your region, you may see a higher return on investment in your house than you will see in your stock portfolio.
Plus, you get to live in it and make great memories over the years.
8. Possibility of Expanding
When you own a home, you can do whatever you want with it (so long as it complies with local zoning ordinances). If your family expands, you can build on an extension.
If you want to renovate your kitchen or paint the bedrooms, you don’t have to ask the landlord. If you want to construct an extension like a second story or a garage, it’s up to you!
These expansions will further increase both your enjoyment of the home and the value of your investment.
9. Laying Down Roots
Establishing yourself in a home embeds you in the community. You will get to know your neighbors, and some may even become friends. Your children will attend local schools, and make their own circle of friends.
You will patronize local businesses and get to know the history of the place. You may watch it change over time.
Many describe the joys of home ownership as enabling them to grow deep roots in a place that eventually becomes special to every member of their family.
10.Peace of Mind
Owning property provides a peace of mind through hard economic times and uncertainty. It can be a source of income and a roof over one’s head.
When all else fails, having a place to call home can provide invaluable peace of mind.
Should I Buy a House? Usually, The Answer is Yes
If you are asking yourself, “Should I buy a house?”, you should examine your expenses, credit, and family’s needs.
If you are planning on leaving the country next year, you may not want to purchase real estate right now. If you do not have adequate income or employment history to qualify for a mortgage, you may not be able to buy something at the present time.
However, for many people buying a house is a good way to invest their finances and make a nice life for themselves and their families. Talk to a professional to see if purchasing a home is the right choice for you.
For more information on the real estate market, check out our website.