If you are still not completely sure if your owning a home is the right decision for you, there are some important things you should consider. Whether you are buying your first home, relocating, or meeting the needs of a growing family, home ownership is, in the long run, less expensive than renting.
Buying vs. Renting
Owning a Home Means Financial Options
A rent payment of $1,000 a month costs you $60,000 in 5 years. A similar house payment, assuming an interest rate of 8% or less on a 30 year mortgage, would enable you to buy a home at a sales price of approximately $125,000 and with a down payment of 10%. After five years, you would have reduced your loan principal by $5,546 and gained appreciation on the entire value of your home, not just on your down payment. That is called leveraging. In addition, you are able to deduct your mortgage interest and real estate taxes, which in a 28% tax bracket would reduce your effective monthly payment to about $754.
A Home is a Good Hedge Against Inflation
While it's true that some homes appreciate faster than others and some years are better than others, real estate has always been known to keep pace with inflation in the long run. In fact, appreciation rates are usually well ahead of inflation rates, so buying a home is good protection.
Owning a Home Gives You Freedom
When you own your own home, you make decisions to please yourself. You can make improvements knowing the money you spend will improve its resale value for you, not your landlord. You choose the neighborhood that compliments your personality and offers the service and atmosphere that you and your family desire.
