Do You Know the Cost of NOT Owning Your Home?
Owning a home has great financial benefits, yet many continue renting! Today, let’s look at the financial reasons why owning a home of your own has been a part of the American Dream for as long as America has existed.
Zillow recently reported that:
“With Rents continuing to climb and interest rates staying low, many renters find themselves gazing over the homeownership fence and wondering if the grass really is greener. Leaving aside, for the moment, the difficulties of saving for a down payment, let’s focus on the monthly expenses of owning a home: it turns out that renters currently paying the median rent in many markets could afford to buy a higher-quality property than the typical (read: median-valued) home without increasing their monthly expenses.”
What proof exists that owning is financially better than renting?
1. The latest Rent Vs. Buy Report from Trulia pointed out the top 5 financial benefits of homeownership:
- Mortgage payments can be fixed while rents go up.
- Equity in your home can be a financial resource later.
- You can build wealth without paying capital gain.
- A mortgage can act as a forced savings account
- Overall, homeowners can enjoy greater wealth growth than renters.
2. Studies have shown that a homeowner’s net worth is 45x greater than that of a renter.
3. Just a few months ago, we explained that a family buying an average priced home at the beginning of 2017 could build more than $42,000 in family wealth over the next five years.
4. Some argue that renting eliminates the cost of taxes and home repairs, but every potential renter must realize that all the expenses the landlord incurs are already baked into the rent payment –along with a profit margin!!
Owning a home has always been, and will always be, better from a financial standpoint than renting.
There has actually been an increase in older renters over the last 10 years. Those over the age of 55 actually contribute to about 42% of the rental market now. This percentage is projected to increase as Baby Boomers presumably follow the same path. buying a house tips
It’s important to understand the pros and cons however of choosing between renting and homeownership. Let’s break each one down so you can better decide theater or not you should spring for that home after retirement. buying a house tips
Pro: Bye Bye Mortgage buying a house tips
If a really big focus for you is the fact that you’re still having to chip away at that mortgage then clearly you’ll be happy to rent. One less thing to worry about when you finally retire. You might even find a place to rent that has a lower monthly cost than your mortgage did. So you do have the potential to be saving money here. buying a house tips
Con: Bye Bye Tax Breaks
Homeowners receive substantial tax breaks. There are deductions on the property tax as well as the interest on the mortgage. Saving on these taxes can add up significantly especially if your property taxes are significantly high. buying a house tips
Read More: Renting Vs. Owning After You Retire
4 Steps to Buying a Second Home
Many people love the idea of owning a chalet in the mountains, a beach house retreat, or a cool apartment in the city, but never take the plunge. Buying a second home is a big financial and life changing step that requires a lot of thought. By following the steps below, you can make then decision of whether or not you are ready for a second property, and find out exactly how how to go about preparing for the purchase of a second home if it is the right decision for you. buying a house tips
Is a second home affordable for you and your financial situation? buying a house tips