The benefits of buying instead of renting a home
If you are contemplating a relocation, you may have to choose whether to buy a home or rent one. Here, we will attempt to streamline the process a little by breaking it down into a list of benefits and drawbacks. While homeownership has a certain appeal, under certain circumstances, it may be better to rent. You should look at the pros and cons of renting vs. buying to determine which option suits you.
Your lender's restrictions and your personal finances will ultimately decide whether you can afford a house. The internet abounds with financial calculators that will help you find the real cost of owning a home versus renting one. There are forces both regional and national at play in your decision as well; when the market is in decline, interest rates are higher and homes are unlikely to appreciate. In situations like these, it may be better to rent than buy, but when the market is up, home ownership makes more sense.
If you buy a home and you're planning to stay in it for only two or three years, you may not be able to get back the closing costs and the home may not appreciate sufficiently to justify the purchase. What's more, if your job is unstable, you may be better off renting a home. Home ownership takes a lot of responsibility- your duties don't end when your mortgage, insurance and real estate tax are paid. You don't get to call the landlord when the heater breaks or something needs to be painted- but home ownership will give you a sense of pride that can't be obtained by renting.
Owning a home also affords tax breaks that renters do not get. When you itemize deductions on your federal taxes, you can take off the interest on your mortgage and any points paid in order to close a loan. All real estate taxes are tax-deductible, and if your home is damaged in a natural disaster, you can deduct most or all of the loss.
Some people regard paying rent as throwing away their money, but that's not always true. If you took the money you would use as a down payment and put it into a fixed rate investment, you will realize a return, but the same cannot be said for a home purchase because returns are not guaranteed.
