For many people, owning a home fulfills their American dream. Others choose to rent their entire lives. Renting vs buying, which is right for you?
From a financial perspective, determining whether you are better off renting or buying will depend on current mortgage rates, local housing costs, and how long you plan to stay in your home.
In addition, however, there are many reasons to consider purchasing a home of your own:
If you decide to rent, you may face annual rent increases; you are at the mercy of your landlord. It is likely that the increases in rent will outpace the cost of inflation, as well as any pay raises you may receive. In fact, owning might be a cheaper alternative than renting these days in many markets, thanks to the low interest rates on hand. In many cases, your mortgage payment may be less than what a landlord charges for rent.
If you decide to purchase a home, on the other hand, you will be building wealth by essentially turning your home into a piggy bank. Every mortgage payment you make will increase your home equity, and your net worth. Why throw your hard-earned money away on rent when you can be paying yourself instead? Home equity can serve as collateral for a loan, which enables you to convert the equity into cash.
In addition, homeowners enjoy tax advantages that are unavailable to renters. Unlike money spent on rent, your mortgage interest and property taxes are both deductible on your federal income-tax return. If you someday sell your primary residence at a profit, much of your gain will likely be exempt from federal taxes. If you take out a home-equity loan, the interest on the loan may be deductible on your federal income tax return.
Of course, as the homeowner, you can make all the decisions regarding colors, upgrades, and design of your home. You are free to make it your own rather than being boxed into a nondescript dwelling. If you rent, your landlord may have other restrictions, as well, such as a no-pet policy.
Homownership is one of the most important financial decisions you will ever make. If you think homeownership is for you, contact Teresa Parker, Loan Officer at Cunningham & Company Mortgage Bankers, NMLS # 2024 at (919) 697-2598 or [email protected]. She can help you decide if it makes financial sense, and how to get started.
Cunningham Mortgage & Real Estate Experts are partners. We help you find the home of your dreams and help you navigate through the home buying process and Cunningham Mortgage expertly helps you through the complicated lending process.