Had a question this morning regarding buying vs. renting and thought I would give a few logical reasons for buying a home as opposed to renting one.
1) A home tends to increase in price over times so this is one of the best investments a person can make without too much risk. A home can increase in value 3-6% every year. Even if it didn't appreciate, you could still sell it and recoup some of your expenses, where as if you were renting when you move, your money is gone and you will be lucky to get your deposit back in the end.
2) You'll pay less tax. This is one of the biggest reasons you buy a home. You can deduct the interest you pay on your mortgage from your taxable income, which means you will pay less taxes.
3) Pride of ownership. This has been the American dream since before the dawn of time.
4) Interest rates are still historically low. This makes it less expensive to buy a home. The lower the interest rate the lower your payments and loan will be.
5) Capital Gain Exclusion: You can exclude up to $250,000 for an individual or $500,000 for a married couple of profit from capital gains, so long as you have lived in your home for two of the past five years.
6) You'll be able to use the equity in your home for low-cost loans for other purposes. You can access the equity you have accumulated in your home in the form of a home equity loan. You can use this to make improvements, payoff bills etc. Because they are secured, home equity loans usually have a lower interest rate than other types of consumer loans. The interest is usually tax deductible at the end of the year as well.
7) You'll be able to redecorate or renovate whenever you like, without worrying about the color of paint you use or wheather or not you can knock out a wall between to rooms to make one big room. Some improvements will actually increase the value of your property, which is excellent when you go to sell your home.
Example of how much your rent could be buying you;
Monthly rent 3 years 10 years 15 years 30 years
400.00 14,400 48,000 72000 144,000
700.00 25,200 84,000 126,000 252,000
1000.00 36,000 120,000 180,000 360,000
Hope this helps all those who are sitting on the edge trying to decide whether or not to buy. It makes no sense not to buy in this market. It is a buyers market right now and the best time ever to buy a home of your own.
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I specialize in the Lowndes County Georgia & surrounding areas, including Moody AFB. Customer service is my #1 priority. Consider me your Professional Home Marketing Consultant!
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This is a great list. But I think right now the biggest obstacle for people looking to buy are 1. down payment and 2. fear. People are not looking at long term right now as far as the tax write offs, the equity building, etc. What they see are the news report predicting doom and gloom and telling them that it is harder than ever to qualify for a mortgage, etc.
Yeah the biggest hurdle is that down payment and then probably not sure if they want to settle in a particular.
There are many advantages to owning and renting. Great blog post. Keep up the nice work
Good post. The other issue also attributed to the Media is buyers think they can get the best home offered for next to nothing and think their property is worth all the money. What happened to stepping stones? I told a couple about a property(banked owned in nice condition), who were renting that would have been equal to or just a little over their current rent. They were currently looking to move and wanted to buy. They never went forward the house sold at great price which they could afford. Now they have moved into another rental at a much higher rent or even mortgage for that matter. Oh well there will always be a another chance in the future.
Amy & Regina- I completely understand the obstacles, and I hear the same with the down payment. How do you get those who are kind of sitting on the fence to take the plunge. Now is an awesome time to buy providing you can get through those obstacles.
Robert - Thanks! I am just starting this whole blogging thing. If you have not gathered by now, a writer I am not. LOL
Lisa - I know the media stirs the pot a lot, and even though there are some fabulous buys out there your still not going to get something for nothing. My goal was to just give some of the benefits of buying rather than renting. The other end of that aspect are owners who think their property is worth so much more than it really is.
Hi Jan,
Nice article, I did read something a few weeks ago where the author recommended that renting was the better solution, especially in distressed areas where it will be 3-5 years before the market rebounds. It did make a lot of sense, and I think the fence sitters are reading those as well.
Dick Beals
Thanks, Dick. Do you remember the name of the article, I would love to read it myself.
Hi Jan,
I searched and searched....sounds like a song...anyway I know it was by Bernice Ross and it was on Inman News...I just can't find it....sorry
Dick Beals
Jan, great post. I concur that fear is one obstacle - the other would be the underwriters scrutiny.
That's ok, thanks for looking. Being new at this stuff I like to read all I can get my hands on.