Buying a home has always been considered to be part of the American dream, nevertheless, in the wake of the recent housing crash, the new generation of home buyers is treading a lot more carefully than before.
Even though renting might seem more flexible than purchasing a home, buying one has a bigger potential long-term payoff. It also has tax advantages as well quality of life benefits. Therefore, it is important that when it comes to purchasing a home you look beyond the numbers.
1. You Build From Roots Upward When You Buy A House
It might be better to rent a place when you know you will not stay in the home for long or when plans are uncertain. However, this type of flexibility also comes with a price. It is very difficult to feel established in any neighborhood when you are not a homeowner. When a person buys a home, they build upwards— starting from the roots. They create a community.
2. Purchasing a Home Comes With Tax Advantages
You get significant tax benefits when you purchase a home rather than renting it. This advantage should be enough of a reason to invest into purchasing a home for yourself. Homeowners can deduct the mortgage interest incurred on the federal income taxes. This is a substantial deduction for numerous people as the interest payments are normally the biggest portion of the early years of owning the home. Homeowners can also deduct the closing fees along with the property taxes.
3. Owning a home is a built-in savings account
There is definitely no place like home. When you purchase a house, you actually automatically get enrolled in a forced savings plan. Even when your budget is pretty tight, you will somehow find the money to pay your monthly mortgage amount. As you pay this mortgage amount each month you subsequently increase your equity. Equity is the amount of money in which you can sell the home for a lesser amount than what you still owe on it. Over your lifetime, home ownership will help you build your wealth.
4. Purchasing a house will cost less than renting one over time
When you look at the bigger picture, purchasing a home is one of the cheaper alternatives of the two. Although your mortgage payment might initially be more than you would actually pay in rent, you are going to spend less money over the life of the loan when you buy a house. The rents may rise over the years, thus changing the entire equation.
Both buying and renting a home has their own advantages and disadvantages. However, if you look at the benefit in the long-term, purchasing a home will be more favorable.