Let’s just trim out the fat and get right into the meat of the matter: owning a house is expensive. Not only do homeowners have to deal with insurance payments and property taxes, but upkeep and maintenance get expensive pretty quickly. In fact, Kate Dore, a contributor to Business Insider who is a homeowner herself, suggests that the standard homeowner should save somewhere between 1 and 4% of their property’s value for maintenance.
But despite those costs, there are plenty of good reasons why buying a house is better than renting, and that’s just what I have laid out for you in this article.
Reasons Why Buying a Property is Better Than Renting
1. It’s More Affordable Than Renting
You’ve probably raised an eyebrow or opened your mouth wide at this, but we assure you that there is truth to this. Buying a house can indeed be cheaper than renting in the long run, but only if you plan your steps in the right direction.
Real estate site Trulia says that owning a house is 38% cheaper than renting nationally on average, which is down by 3% from 2013. The calculations are based on a conventional 30-year, 20% down fixed-rate mortgage. The website compared the total number of homeownership costs (including taxes, insurance, and maintenance) to the total amount of renting for the same duration.
In the results, there’s a huge difference in the costs when comparing the rising rent costs over the years with the low fixed rate and mortgage rate, which as of this writing, sits at 4.5%. Now we’re not saying that buying a house is less expensive as it is since homeowners need to pay mortgage insurance or a 20% down payment, which could deplete one’s overall savings. What we’re saying is that if you pay more for your property upfront, you’ll be saving more in the long-term.
2. You Can Customize Your House as You Like
Another incredible reason why owning property is so important is that you get to decide how your house looks like from the inside. Without answering a landlord or seeking their permission, you’re free to do whatever interior decorating you want to do with your own space. You can even keep pets, turn your lounge into a gaming arena, or anything else you like. You are your own boss/landlord.
3. Rents are Continuously Increasing
To those who still favor renting, we’ve got some terrible news for you: rental costs are increasing very fast around the country. In fact, this has been going on for some time now and is expected to continue going forward in the future.
According to the Urban Institute’s research, rents have grown even quicker than median incomes in most markets. By comparison, monthly mortgage payments are similar or perhaps even more affordable than renting a house for yourself. If you think this is a fib, then you can use Zillow’s own Rent versus Buy Calculator that will show you how many years it’ll take before the price of homeownership equals the cost of renting itself.
If you apply for a fixed-rate mortgage on your property, you’ll notice that your mortgage payments will never change. Whether you want to own a house or rent a place somewhere in Toronto, have Paradise Developments find a place that befits your needs.
4. You Build Equity
Building equity is another reason why buying is better than renting. With each mortgage payment, you build equity in your home. This will reach a point where your house will have much greater value than what you owe. So when the time finally comes to sell your house, you’ll have some extra cash lying around.
But besides that, you can also use your equity for unexpected events or emergencies like unemployment, hospital bills, etc. Depending on the credit score and lender, homeowners can borrow a maximum loan-to-value ratio of 80%. This simply means that you can borrow about 80% of your house’s loan value if you have only 20% equity in your mortgage.
Compared to renting, it’s better to see equity in your own house increase instead of someone else’s. And since you’re already paying for the housing anyway, why not use some of that payment for yourself?
5. Tax Benefits
When thinking about ‘why is it better to buy a house than rent,’ it’s because of the tax deductions. Homeowners are allowed to deduct property and mortgage interest taxes when they file for tax returns every year. Besides that, homeowners can also deduct eligible expenses (like making some energy-efficient improvements) and sometimes avoid federal taxes due to earnings made from the house’s selling.
If you also happen to be paying for private mortgage insurance (especially when making a less than 20% down payment), you might even be eligible for a deduction there as well. Furthermore, you’ll also qualify for tax deductions if you’re working from home and have your own designated space for conducting your work.
Despite being accountable for your own house’s repairs and maintenance, you get to deduct part of your monthly house expenditures on your taxes, something which renters don’t have the luxury of.