The Benefits of Owning Rather than Renting
If you buy a home, you may find that the benefits of owning rather than renting far outweigh what you’ve imagined. Homeownership is an integral part of the American Dream, and it has never made more sense than it does right now. Rental costs have been skyrocketing for a few years. Buying a home costs more, too, but is still better than renting if it fits your personal goals. The top benefits of owning rather than renting a home follow.
Improve Your Net Worth Monthly
If you take out a loan to defray the costs of owning a home, you’ll have to make monthly mortgage payments to your lender. Mortgage costs can seem like a monthly burden, but they can only serve to increase your net worth in the long term.
Mortgage payments steadily build equity on your home. Your mortgage costs cover property taxes and insurance. One month at a time, your net worth increases. Home values have drastically increased in the past few years, which makes homeownership a lucrative long-term investment. Tax benefits of homeownership are an added plus.
Renters make payments that increase their landlord’s wealth. Rent covers the landowner’s costs plus property management fees. The separate expense of carrying renter’s insurance is another charge that is required in most leases.
Practice Freedom in Your Living Space
Your own home is a place where you can renovate and decorate to your heart’s content. There is greater freedom and privacy to live life your way when you own the property. You can put nail holes on the walls, paint your home interior in unique colors, plant a garden, and generally call the shots when your name is on the mortgage. The freedom includes keeping the pets of your choice, with the possible exception of Homeowners’ Association (HOA) rules.
Moving into a particular apartment complex may not be possible because your favorite kind of pet isn’t allowed, whether a bunny, cat, dog, bird, or reptile. Upon moving out, renters often find that their landlord has held back a portion or all of their deposit for such things as tiny nail holes and everyday wear and tear.
Enjoy Consistent Monthly Payments
As a homeowner, you can enjoy steady monthly payments. Mortgage payments mostly comprise the principal amount and interest. With a fixed-rate mortgage, your monthly amount for principal and interest will remain the same until the mortgage is paid off. Exceptions include fluctuations in property taxes or homeowners’ insurance, and those variations are usually small.
While some of your mortgage expenses won’t help you build equity, you can still keep your mortgage as low as possible. One way is to choose the right lender by checking their fees, rates, and general performance in the market. Look for a lender who offers low interest rates, less costly insurance, and flexible mortgage terms.
Meanwhile, renters have faced increases of 12 percent to 20 percent in monthly rent costs in recent years. Fortune reported that rent prices for one-bedroom apartments hit an all-time high in 2021. As of January 2022, $1,374 was the median price for a one-bedroom apartment. For a two-bedroom apartment, the median rose to $1,698.
Put Down Roots
When you buy a home, it typically means you will stay put longer than if you are renting. Part of the hunt for a home is the confidence that you can stay for at least several years at that location. The process of buying, selling, and moving is often challenging, and it promotes the idea of putting down roots.
Renters, on the other hand, tend to pull up stakes frequently. Motivations to keep moving include poor property management, skyrocketing rent prices, and the ease of pulling up roots.
Rent Out a Room for Extra Income
Having your own home means that you can always choose to increase your income by renting out a room. Renting makes you eligible for certain tax deductions while generating extra income.
If there’s a large living space over the garage, you could transform it into a separate apartment. The rent you charge is entirely up to you. If you like the idea of short-term tenants, you can rent out a room on Airbnb.com.
Leasing terms for apartments don’t traditionally provide options for earning extra income with the space you are renting.
However, it’s essential to know that renting out a room or a separate property requires careful consideration of certain factors. For instance, you should review landlord-tenant laws applicable to your area to ensure you know what you can and can’t do legally if you rent out a space in your primary residence.
Also, it’s best to check with your insurance broker about how renting can impact your coverage. You may be advised to add a landlord insurance policy to cover certain risks associated with the rent.
Join a Community
A sense of community often goes along with homeownership. Buying a home can increase your happiness because it fosters a sense of belonging. The neighbors around you and others in the community could become lifelong friends.
Renting an apartment tends to be viewed as a short-term solution. The norm is to have many neighbors you never meet. With people continually moving in and out, it can be difficult to cultivate a sense of belonging.
Boost your Credit Score
Paying off different types of loans consistently improves anyone’s credit score. A better credit score offers numerous advantages, such as lower interest rates on loans and credit cards, better car insurance rates, and more negotiating power on major purchases. When you consistently make on-time mortgage payments, however, the process of building better credit speeds up. This is another benefit that renting can’t quite compare to.
For many people, the very benefits listed above are arguments in favor of renting. Truth is, buying a home could work against your preferences or lifestyle choices. Your career choice, for example, may not fit best with an investment in homeownership. On the other hand, buying a home may be best for you but the upfront costs may seem like a tremendous obstacle. If you agree that buying instead of renting a home has great benefits, be sure to speak with a real estate agent and learn about options in financing that may be available to you.