Rent vs. Own

Renting vs. Owning a Home

Think you can’t afford a new home? Let’s take a closer look.

Paying a mortgage builds equity

Doesn’t it make sense to explore the option of owning your own new home? You may be surprised at the affordability. Nearly all of us pay a monthly housing payment. Some pay a landlord, others pay a mortgage company. In both cases that payment is building equity in the place where you live. The question is, whose equity are you building? Equity for you and your family, or for your landlord?

Any improvements you make are truly yours

When you rent, any improvements go back to the landlord, and you only get to enjoy them while you are renting their home. As a homeowner, you increase the value of your property with any improvements you make to the space.

Homeowners receive tax benefits

There are also huge tax advantages associated with purchasing a home that you’ll benefit from at the time of purchase and on an ongoing basis. The first benefit comes the year you buy your home – you’re typically able to claim discount points on your loan, regardless of who paid them. What are points? There are two types of mortgage points: Origination points and discount points. Each point is equal to 1% of your total mortgage. Origination points compensate lenders, are not always required, are often negotiable and are not tax deductible. Discount points on the other hand, are prepaid interest, can lower your overall mortgage payment and are tax deductible. Each point you purchase typically lowers your mortgage interest rate by 0.25%.

Going forward, you can usually deduct the interest you pay on your mortgage from your taxable income. This can equal huge savings, especially early on in your mortgage when interest makes up the bulk of the payments. While you might not be excited about paying property taxes on your new home, you also are usually able to deduct these as well.

Individual  tax situations vary – consult your accountant for specific details.

Homeowners have a more stable living situation

Owning a home is different from renting. There are incredible feelings of independence and freedom that come with home ownership. You are living in your own home, have control over it and you can do as you please. No one can kick you out or raise your rent.  You can make changes and improvements as you see fit.

With a home purchase comes the pride of ownership and the sense of belonging in a community where one has a financial stake in the neighborhood.  Ownership entails greater individual responsibility making homeowners “happier” from having achieved the so-called “American Dream” and providing a milestone sense of accomplishment.

Additionally, home ownership boosts the educational performance of children, induces higher participation in civic and volunteering activity, improves health care outcomes, lowers crime rates and lessens welfare dependency.

Home ownership produces immense social benefits for families, local communities and the nation.