When considering buying a home or renting, you have some decisions to make. House buying and selling season is just about upon us, and this is the time of year that many people start thinking about the pros and cons of buying vs. renting. We’ve put together a short list of things to be considered before making any major financial decisions in this area.
Home ownership can be considered a giant savings account… if you plan on staying in the home for a longer period of time. That is to say, when buying a home, no matter how tight the budget, you do everything in your power to pay the mortgage. And as you pay that down, your equity increases over time. Over a long period of time, home ownership accumulates wealth.
Buying a home offers great tax advantages. In many cases, the tax advantages alone may justify your interest in buying a home. And speaking of interest, your mortgage interest is one of the largest tax deductions that you may claim. Since interest is the largest part of most mortgage payments in the early years, this can be a very substantial deduction. You may also deduct some closing fees and your property taxes.
If you’re really struggling over buying a home vs. renting, consider this: buying a home costs less than renting over time. Your mortgage payment may be higher at the outset when you purchase a home, but it’s important to remember that rent very rarely ever decreases over time. Instead, you are virtually guaranteed rent to increase to keep up with the cost of living, and often by much more than that.
Renting a home requires fewer upfront costs and paperwork, and allows more nomadic lifestyles the freedom of relatively easy movement. But you will never build any equity, other than what you voluntarily build for the landlord of the rental. In essence, you are trading time (in someone else’s home) for money, and agreeing to help them pay off their mortgage and gain all the tax advantages of ownership.
When you think of it from that perspective, many people decide that they’d rather build their own wealth, than that of someone else. This is when they decide that buying a home is a better choice for them. But that is just the beginning of the myriad of choices that must be made in the home buying process.
And that is why it is more important than ever before to hire a professional real estate agent who can not only answer your questions, but who knows the market, the area, and who can help you steer clear of the many potholes on the road to success.
Van Morgan is a Colorado native with a vast wealth of knowledge of the Colorado real estate market. He is ready and able to answer all of your questions when it comes to buying a home vs. renting. And when you are ready, he will meet with you, listen to the things that matter most to you, and then find and deliver your next home. Contact Van
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