10 Benefits of Buying vs Renting

According to RentData.org, Connecticut has the 7th highest rent out of 56 states and territories. The average fair market rent price for a 2 bedroom in Connecticut according to this page is $1559. So why rent when you can buy? What are the benefits of buying vs renting a home?

More often than not, people tell me that they rent because they don’t have enough savings for a down payment. But there are many available programs that offer low down payment options as well as closing cost assistance. Keep in mind that when you sign a lease you are already providing first, last month and security deposit. At an average of $1559 for a 2 bedroom in Connecticut, that is $4,677 just to secure the unit. But did you know that to buy a home as you qualify you may need as little as 3% of the purchase price?

Here are 10 benefits of buying vs renting a home:

1. Building Equity

Equity is the difference between the current value of the home and the amount you still owe on the mortgage. When you buy a home, you are investing in an asset that will increase in value over time. This allows you to build equity, which can be tapped into later in life. Building equity when purchasing a home is a great way to grow your financial security and wealth over time. You can build equity in a few different ways:

Making your mortgage payments on time and in full – Every month, you are paying down the amount of your loan and increasing the amount of equity you have in the home.
Making improvements to the home – Adding value to the home by making improvements can also increase the amount of equity you have.
Keeping up with market trends – Monitoring the real estate market and staying aware of home values can help you stay ahead of the curve and make sure that you are able to build equity as the value of your home increases.

2. Tax Benefits

Buying a home comes with a variety of tax benefits that can help you save money each year. Depending on the type of mortgage you have, you may be able to claim a deduction on the interest you pay on the loan. Additionally, if you itemize your deductions, you may be able to deduct the amount of property taxes you pay each year. Additionally, if you make improvements to your home, you may be able to include those expenses in your deductions. Finally, if you decide to sell your home, you may be able to exclude up to $250,000 of your profits from capital gains taxes. As always, consult with a tax professional to learn more about the specific tax benefits of buying a home.

3. Stability

Buying a home can provide you with stability and security in many ways. Owning a home gives you a place to call your own and create a long-term, secure foundation for yourself and your family. With no landlord to worry about, you can make improvements to the home and customize it to fit your needs and lifestyle. It’s also a more affordable option than renting in the long run. Lastly, it gives you peace of mind knowing that you can stay in the same home for however long you choose, providing you with stability and the opportunity to build a life within the same community.

4. Freedom to Customize

When you own a home, you can customize it however you like without needing to get permission from a landlord. You can choose the colors, materials, and layout you prefer, giving you the opportunity to make the home an expression of your unique style. Additionally, buying a home allows you to make more permanent changes than you could with a rental, such as installing new fixtures, renovating, and making structural changes. These changes can create a home that is truly yours and fits your lifestyle.

5. Pride of Ownership

Buying a home is a major milestone in life and a symbol of success. It’s a tangible asset that you can invest in. It’s a place to call your own, to make your own, and to create memories with family and friends. Owning a home gives you a sense of accomplishment and pride that you can look back on and be proud of.

6. Financial Security

Buying a home can give you a fixed long-term housing cost which can help you plan your budget more effectively. Your monthly mortgage payment (principal and interest) amount will always be the same throughout the duration of your mortgage, it will never increase. As a matter of fact, you may have an opportunity to lower this payment if interest rates are ever below what you originally financed your home at. In other words, when you buy a home you get financial stability as you are not at the mercy of a landlord raising your rent.

7. Community Involvement

Buying a home is an excellent way to get involved in your community. When you purchase a home, you become part of the neighborhood and can get to know your neighbors better. You can also join local homeowner associations and participate in community events like block parties, neighborhood cleanups, and book clubs. Additionally, you can participate in local volunteer activities or run for a position on the local homeowners association board. By becoming more involved in your community, you can help create a safe and welcoming environment for everyone.

8. Forced Savings

When you buy a home you are effectively investing in a long-term asset. Overall, buying a home can be seen as a forced savings plan because it encourages you to save to be able to maintain and improve its value, while also providing tax savings.

9. Predictable Expenses

A mortgage payment is a fixed expense, so you know what to expect in terms of your monthly housing costs.

10. Potential Appreciation

The value of your home can appreciate over time, providing you with a return on your investment. There are a few things you can do to help your home appreciate over time. First, focus on making improvements that are cost-effective and increase the value of the home. Look at updating outdated features such as the kitchen or bathrooms, or improving the landscaping or exterior of the home. You can also consider investing in energy-efficient upgrades, as this can help save on utility bills and make the home more attractive to potential buyers. Finally, keep up with regular maintenance, such as painting and cleaning, as this can help keep your home looking its best.

Summary:

Always remember that as renter, you are already paying a mortgage, it’s just not yours, it’s your landlord’s. If you would like to discuss additional benefits of buying vs renting a home, let’s get in touch so I can help you prepare for the process.