Buying a home versus renting a home is a hot topic in the current real estate climate. Homeownership still remains a number one goal for many Americans. With an American dream being owning your own home, there are many benefits to buying your home. While some people may not think they can own a home and will be stuck renting forever, there is hope to capture the American dream. Buying a home versus renting a home has many benefits. Some of these benefits are: buying a home is an investment, full control over your renovations, actually owning the property, and other financial incentives. Here we will cover a few of the numerous benefits to homeowning versus home renting.
Buying A Home Means
Buying An Investment
As many of you know, buying a home is a safe, long-term investment. Most homeowners gain positive equity value in their home. Not only are you paying into your investment, but you are also gaining equity through property value appreciation. Equity is a key to building an individual’s or family’s net worth. Homeowners are able to take advantage of their equity by using equity to borrow money, receive more than paid for the sale of their home, and in some cases, use a reverse mortgage. Luckily, most homeowners are able to take advantage of the gradual increase of property values in America.
Home equity increased in the mid-to-high teens, on average, in 2020. Homeowner’s investments, aka their homes, greatly appreciated during the 18 months following the start of the pandemic. In America, we constantly see consistent asset price increases. Whether it is because rent is going up, supply and demand, or low interest rates, homeowners are usually rewarded for owning their homes. Homeowners can often times see a positive equity gain in as little as three years.
Buying A Home
Owning a home has multiple financial benefits, aside from equity. Homeowners receive a positive bump in credit scores from adding real estate to their credit mix. Mortgage loans are beneficial for credit as it diversifies credit from more than credit card usage. In the current market, another financial benefit is low interest rates. As the pandemic caused a cut in interest rates to spur the economy, fixed-rate mortgages offered historically low interest rates. A fixed-rate mortgage is beneficial for homeowners in the current landscape because interest rates will eventually edge up. While interest rates are low and will be until mid-to-late 2022, homeowners who locked into their fixed-rate loans will not have an increase in their interest rates.
Finally, being a homeowner can actually help in terms of taxes. Homeownership goes hand-in-hand with tax benefits. These benefits are only available to homeowners, where as renters cannot take advantage of them. Homeowners are able to deduct their mortgage interest. Homeowners are also given a tax break when selling their homes, as they are not forced to pay a capital gains tax on up to $500,000 for married filing jointly. As a home renter, these tax benefits are impossible to take advantage of.
Buying A Home
Means Endless Possibilities
As a wise man once told me, there are only two things that limit what you can do to your home. These two things are your money and your imagination. Throughout the years of experience of being in hundreds of homes, you see a lot of neat and interesting (to be nice) things. Not everything you see on Pintrest is always a good idea, and I think everyone in America has a barn door in their homes. While this isn’t your imagination, it is someone else’s, just think about what you can do if you are creative. Being a homeowner allows you to control the who, what, when, where and how of your home. As a renter, you are at the mercy of the homeowner. As a homeowner, you see that wall that you don’t necessarily like, you can take it out (after consulting with a professional, obviously).
Buying A Home
Renting A Home
To conclude, if you can buy a home, do it. If you cannot because you’re not sure where to move, need to move soon, have low credit, etc., then you should rent. Whatever your financial background is, buying a home versus renting a home is typically based person by person. However, at Premier Homes Realty, we love to help make people’s dreams of homeownership come true.
We would advise that everyone work towards that goal of owning a home sometime down the road. If you are looking to buy a home, do not overlook the importance of using qualified real estate agents. First-time home buyers should not be discourage because of the hot housing market in 2021, and they should still work towards becoming first-time homeowners. Many people are still on the fence about whether it is a good time to buy a home, but experts are still certain that the market is healthy. To look for homes for sale in Louisville, Kentucky, contact the Premier Homes Realty team to learn more about your buying or selling roadmap.