While there are some benefits to renting, owning a house is generally the better way to go. That’s likely the reason why in 2018, Bloomberg reported that homeowners in America outnumbered renters two-to-one. For those asking themselves the question, “Should I rent or buy a house?” – here are a few reasons why buying is likely to be the better answer.
A Better Long-Term Investment
When you rent a home, you’re paying your landlord every month, but you aren’t actually getting anything to show for it. Monthly mortgage payments, on the other hand, are going toward the purchase of your home. It’s kind of a forced method of saving, because at the end of your 15- or 30-year mortgage, you’ll own your home outright. If you decide to sell, you’ll basically be getting all that money back, and likely more as the home’s value usually appreciates over time, with the rate of return increasing the longer you own it. Rent that same home, and you’ll never get those monthly rent payments back.
Owning a home means not having to worry about being forced to move should your landlord decide to sell or use the home for some other purpose. When you’re renting, especially in an area where good rentals are hard to find, that can be extremely stressful fact constantly looming over your head.
When you own your own house, you have the freedom to do what you want with it. You don’t have to ask your landlord if you can get a dog, you can renovate the landscaping, change up the paint, add a new room, and so on. If you’re renting a place, oftentimes you can’t make any changes at all, pets may not be allowed, and if you want to make improvements to the home, the owner will reap any financial benefits and will have to approve them too.
Your Payments Won’t Change
Provided you take out a fixed-rate mortgage when buying your home, those mortgage payments won’t change. This is not the case when you are renting, as many landlords raise the rent every year. Sometimes they even kick out good tenants when rent prices in the neighborhood rise just so that they can get someone new who will pay a higher amount. With the cost of rent increasing at an incredibly fast rate across the country (a trend expected to continue) the high price of renting means paying a monthly mortgage can be even cheaper or at least comparable to renting.
Owning a Home Has Tax Advantages
One of the monetary benefits you’ll reap on a more immediate basis is the tax advantage. The interest payments on a home loan, as well as loan points and property taxes, can typically all be deducted at tax time. With the majority of monthly mortgage payments during the early years of the loan going towards interest, that can be a big financial benefit. While those deductions typically amount to significant savings, they aren’t available to you as a renter.