Buying? Is it better than renting?
We all know the phrase ” The American Dream.” For much of history and even today, owning a home was considered part of this American Dream scenario, the whole white picket fence picture. There are many obvious benefits of owning a home and also some that are not so obvious.
Understanding what the benefits of home ownership are can really help make the decision whether to buy a home easy. So let us lay them out for you!
If you’re going to be buying a home by obtaining a mortgage, it’s highly likely that the mortgage product you’ll use for the purchase will be a fixed rate mortgage since they’re the most popular type of mortgage. With a fixed rate mortgage comes stable monthly payments, which is one of the best benefits of owning a home.
The stable monthly payments that come with owning a home can provide some great peace of mind as it makes it easier to create a predictable monthly budget. Certainly monthly payments can change when owning a home if property taxes or homeowners insurance were to change, but the amount of change in property taxes is normally a very small amount.
2.) Building Equity
When you hear people talking about real estate and owning a home, one of the most popular words you’ll likely hear is equity. Equity in real estate is the probable market value of a home minus any liens against the property, such as a mortgage. One of the great advantages of home ownership is the opportunity to build equity.
The longer that you own a home, the more you’ll pay towards the principle balance of any liens. As the balance of any liens against a property gets lower and hopefully the value of the property increases, the larger the equity.
In most Cities across the world, if you were to compare a rental property and the monthly mortgage of a comparable home, the cost of ownership is typically much less.
4.) Tax Advantages
There aren’t many people who enjoy paying taxes but it is a necessary evil. A great benefit of owning a home are the tax advantages that it provides.
Arguably the biggest tax advantage of owning a home is the option to deduct paid monthly interest from your tax returns. During the first several years of the term of a mortgage, a borrowers monthly payment is almost all interest. This means that at the end of the year there’s a nice deduction.
When someone is weighing their options as to whether they should keep renting or buy a home, one of the biggest factors is often the ability to make changes that ownership provides. When you rent a property, it can be difficult to make even the simplest change such as painting a room as it’s often spelled out in a lease that you cannot alter the property in anyway.
A huge benefit of owning a home is the ability and freedom to make changes. Whether it’s something as simple as painting a bedroom or something complex such as a complete kitchen remodel, when you own a home you can make changes as you see fit.
Not only is the ability to make changes to a property a great way to make a house feel like a home, it also can give a nice bump in the properties value.
If you’re currently living with family, friends, or renting a property and you’re considering the purchase of a home in the Duluth area, feel free to reach out to Lake Superior Real Estate Team! We are here to help!