Reasons Owning is Better Than Renting

Let’s be honest: buying a house is a huge expense. Aside from recurring property taxes and insurance payments to pay, maintenance gets expensive fast.

However, it’s worth it and gives you a sense of stability that renting won’t bring. Setting those costs aside, owning a home could give you huge benefits. Apart from the fact that your house will be yours forever, you also have the potential of having future passive income. Besides, owning a home to live mortgage-free can set you up for a comfortable life after retirement.

Moreover, you could have a financial benefit that those who are renting won’t have. This includes the possibility of gaining profit when you move out and sell your home, or the opportunity to live mortgage-free someday. Here are 5 powerful reasons for you to consider owning a home instead of renting:

1. Appreciation Benefits

Owning a house is an expense that several people can understand better than purchasing stocks because they get the actual daily benefit of living in the house than renting. Houses appreciate faster than stocks as you get the appreciation of the entire home’s value, not just the gain on the cash you invested for the down payment.

Homeownership enables families to increase any appreciation on the value of their houses by a leverage factor. A 20% downpayment produces a leverage factor of five, which means at every percentage point rise in your home’s value is a 5% return on your equity.

For instance, if you purchased $30,000 in stock and it appreciated 3% per year for three years, you will gain $2,782 on top of your $30,000 invested — and if you sold it, you would pay taxes on the money earned.

However, if you purchase a $300,000 house with a $60,000 down payment (representing 20% down) and it appreciated 3% per year for three years, you will gain $27,818 on top of your $30,000 invested. And if you ever decided to sell it, you will be exempted from paying any taxes on that money gained.

2. Either Way, You’re Still Paying for Housing

Some people claim that renting reduces the cost of property taxes and house repair. However, every home renter should realize that all the expenses that the landlord incurs, including property taxes, repairs, and insurance, are already added into the rent payment – along with a profit margin.

3. Homeowning Is Usually a Sort of “Forced Savings”

As a homeowner, when you are making a mortgage payment, a portion of it is paying the loan down every month. This way, the owner gets more equity in their home.

Studies have revealed that homeowners have a net worth 44 times higher than that of a renter. It was recently estimated that a household who’s buying an average-priced house this past January could make a $42,000 in family wealth over the next 5 years.

For example, in a $300,000 home purchase with 10% down, the average paydown per month in the first year is $423. This paydown per month is needed as part of the mortgage payment. However, it is the owner that’s required to invest in their own house, so it’s like forced savings that profit the owner. On the other hand, the entire portion of a renter’s monthly payment is going to a landlord.

4. Homeowning Is a Hedge Against Inflation

House prices and rents tend to go up at or higher than the inflation rate. Inflation increases your cost of living and reduces the purchasing power of each unit of currency. When you own, the value of your home will protect you from inflation.

5. Tax Benefits

Homeowners are allowed to claim deductions on mortgage interest and property taxes when filing tax returns. Using the same example of $300,000 home purchase with 10% down, your total monthly housing cost will be around $1,731, with $1,231 in principal and interest, $300 in property taxes, $67 in insurance, and mortgage insurance of $133. Homeowners could save $335 per month in taxes, which makes owning the same as or cheaper than renting.

Owning a house has always been and will always be better than renting. With owning, you can do whatever you like, from full remodeling to repainting your walls. You get to have more flexibility in all of these things when you own rather than rent.

If you to own a house today, you may seek professional advice from Platinum Group Estates. They will help you look for the home that would meet your budget, wants, and needs. Working with Platinum Group Estates gives you the benefit of being able to see more than what other agents will show you.