“Should I buy a home or just continue renting my current one?”This is the perennial question on many would-be homebuyers’ minds.
The answer ultimately depends on your personal and financial situation as well as the current state of the market. But you should know that homeownership comes with several great perks you won’t want to miss out on. Below are just a few of them:
- 1. Save money in the long run
At the outset, it might indeed be cheaper to rent rather than own a home. As you pay off your mortgage, however, your monthly payments will eventually decrease and are likely going to be lower than the current rental rate. You’ll be paying less in the long run and you get a home to show for it, too.
- 2. Increase your net worth
Why is real estate one of the best investment vehicles available? It simple supply and demand, really. Remember that land is a finite resource, and only one structure can ever stand on it at any given time. If your home is in a good neighborhood, there will always be more buyers than there are available properties. This causes your home’s market value – and your net worth! – to rise.
- 3. Get tax deductions
Being a homeowner means paying certain taxes that renters don’t have to. That said, homebuyers do enjoy some attractive tax breaks. First off, you’re allowed to deduct your mortgage interest from your income tax, saving you hundreds if not thousands of dollars per year. Furthermore, you can also deduct property taxes paid on your primary residence and vacation home.
- 4. Build equity
Until you pay off your loan, the mortgage lender technically still owns your home. But with every payment, your equity or stake in your home increases. If you build enough equity, you can eventually borrow against it to pay for big expenses, such as your child’s college tuition or a new car. In short, your monthly mortgage payment builds up a credit line that you can use in the future. Just be sure to use it wisely!
- 5. Enjoy capital gains exclusions
If you decide to sell your home, you can pocket more money thanks to certain capital gains exclusions. Single homeowners can pocket profits of up to $250,000 tax-free, or up to $500,000 if they’re married. Whether you keep or sell your home, it’s a win-win situation.
- 6. Build your credit history
Chances are, your mortgage won’t be the last loan you’ll take out in your lifetime. For instance, you might decide to borrow money to start a business or to renovate your home. If you religiously pay your mortgage, you’ll have an excellent credit history that can net you more favorable interest rates.
- 7. Stop paying for your landlord’s mortgage
Here’s the hard truth about renting: your landlord probably took out a mortgage for your rental – and your rental payments are paying for it. Once you understand this simple fact, you’ll never look at your rent the same way again. Invest in your own property – and reap the benefits for yourself.