One quick Google search and you’ll find dozens of articles about why millennials and even many Gen Xers are opting to rent vs. buy. While there are certainly valid arguments, the fact is there are a number of pretty compelling reasons why opting to purchase a home is actually better (and no, you don’t have to give up avocado toast to make that happen.)
If you’re on the fence, wondering whether you should take that plunge and enter the wonderful world of home ownership, here are five reasons you absolutely, positively should.
Ok, well, technically it will probably belong at least partly to the bank for 15-30 years, but still…it’s your home (and you get all the upside?). Instead of paying your landlord’s mortgage, you’ll be investing in your own property – your own future. And because it’s all yours, you get to do whatever you want to your home. Paint it yellow. Add solar panels. Plant a garden. Adopt a bunch of shelter pets. As long as it’s not illegal and doesn’t go against town ordinance, your home is your castle to do with what you please. Doesn’t that sound awesome?
Every time you pay your rent, you get….well, you get to stay in your apartment for another month. When you pay a mortgage, on the other hand, you’ll be steadily increasing your personal wealth. The more you pay down the principle of your loan, the more excess – or equity – you’ll end up with. For instance, let’s say you buy your home for $300,000. After a couple years, that balance drops down to $270,000. The leftover $30,000 is the equity you’ve built up.
Now, let’s say you’ve paid down the balance of your home loan to $270,000 but when you have your house appraised again, turns out its value has gone up to $350,000. Now your equity has increased from $30k to $80k! Once you’ve built up equity, you can borrow against it to pay for everything from home renovations and medical bills. Oh, and let’s not forget those lovely student loans you’ve still got piling up. Pretty sure your landlord isn’t going to help you out with those.
Unless you live in an area that has rent control, chances are you’ve already felt the pinch of inflation (if you haven’t, trust us – you will soon enough.) As the cost of living rises, so does the cost of rent, which means you’ll probably end up paying more when it comes time to renew your lease. When you purchase a home, on the other hand, the amount you pay remains the same, or is at least predictable, regardless of external circumstances.
As an added bonus, when you don’t have to worry about the amount of your living expenses going up, you’ll end up with more disposable income every time you get a raise at work. So, at some point in the near future, you’ll be able to own your own home and enjoy avocado toast whenever you want. Imagine that!
You can’t cheat the tax overlords, but when you own a home, you can get some sweet tax deductions that will make you feel a lot better about filing at the end of the year. Not only can you deduct the interest you pay toward your mortgage each year, but you can also deduct property taxes, and eligible expenses for certain home improvement projects, such as making energy-efficient upgrades (your tax advisor can help you figure out which types of deductions you’re eligible to take). Yes, there will be a few more forms to fill out, but the benefits are well worth the extra effort.
Last, but certainly not least, we all know how important it is that we take the measures necessary to reduce the impact we have on our precious natural resources. While renters are limited in the number of green improvements they can make, owning your own home empowers you to reduce your carbon footprint in much more significant ways. For instance, you can reduce your energy consumption by having solar panels installed on your roof or using low-flow faucets, toilets and other energy-efficient appliances.
Not only does home ownership allow you to enjoy a more eco-friendly lifestyle, but your bank account will also benefit. For example, being more efficient will help you save money on your utility bills. Plus, the eco-conscious renovations you make could also increase the value of your home. It’s a win-win-win. (Yes, that’s a thing.)
As you can see, there are plenty of good arguments for the buy vs. rent debate, but the best way to really find out if purchasing a home is worth the investment is to get in touch with an experienced professional Mortgage Advisor who can address your specific needs.
Want to explore your specific Own vs Rent scenario? Our mortgage advisors can help.
Image courtesy of Olu Eletu