The Hidden Costs of Renting vs. The Benefits of Homeownership
The Hidden Costs of Renting vs. The Benefits of Homeownership
Instability of Renting
Your family is living in a rented house on a temporary basis. Any infraction allows a landlord to remove you with a 30-day notice. Plus, he can kick you out if he wants to sell the property. As inflation pushes up the cost of living, your rent goes up as well. Even apartments in affordable housing programs can raise monthly tenant rent over changes in a tenant’s income or changes in a utility analysis.
Homeowners are permanent residents and their family will not be forced to leave unless their mortgage defaults. Fixed rate mortgages offer stability to homeowners who cannot afford purchasing a home upfront. Fixed rate mortgages are comprised of consistent monthly payments, regardless of the economy or your paycheck.
No Equity Building
Monthly rent payments consist of money that is not being invested in long-term security nor is it building up savings. Homeownership, despite popular opinion, is an equitable long-term investment. Like any investment, it has risk, chiefly with the value of the property and house.
You can take steps to increase the value of your home and property and decrease risk. If you choose a location where new construction or growing economic activity is occurring, the property value increases. If you invest in renovating your home, your house value also goes up. If you are renting, any changes you make toward the house increases the value of the landlord’s property. If new shops open near your apartment, the property value will increase, and eventually so will the rent price.
Restrictive Regulations
Many apartments will not allow for any renovations or major decorative changes to their units or houses, such as changing counter tops or painting the walls. If you choose to buy a home or unit space, you can customize the look of your space with no regulations. You can renovate a room or the entire house to make your home more valuable or more livable.
Some apartments also do not allow smoking or animals and have restrictions on the amount of people on a lease. If you own your own home, you can have anyone or any pet living with you.
Financial Benefits of Homeownership
Giving up renting also has financial incentives. Not only will you have stable residency and a chance to build equity, but you can receive savings and tax credits for becoming a homeowner. Over the course of six years, the average homeowner’s monthly payment will be less than a tenant’s monthly rent.
The government also provides tax incentives for homeowners. Interest on a house loan is tax deductible as are property taxes. Other perks of homeownership include the exclusion of profits from capital gains and energy-saving rebates or tax incentives if you install green appliances.
