Let’s be honest, when it comes to personal finance…you either love it or hate it. But…
In recent years the practice of home buying in our country, with all the accompanying grief and debt of subprime mortgages has given the whole “American dream” a bit of a bad name. In the past we may have been taught that buying and owning a home was an inalienable right, and a mighty good investment.
Many of us saw our fellow Americans on the news, or our neighbors, or our own families, struggle with the fact that this “investment”, the home of their dreams, would never truly be theirs, or worse, we saw people lose everything they “owned”, including the roof over their heads.
There are, however, certain advantages of buying a home versus merely renting one. And if the past few years and recessions have taught us anything, it’s that we should educate ourselves in defense against anyone trying to rope us into a debt scheme that we can never escape. There are ways to own a home without crippling ourselves with debt or being tricked out of our money.
A house has long been considered one of the best long term investments that we can make. Not only does owning a home guarantee that we and our loved ones always have a roof over our heads, it can be used as equity in other financial pursuits. These are the areas where we must exercise caution however, and be sure we are not leveraging things we cannot afford to pay for under our current loan or mortgage agreements.
Once you are certain that you want to settle down in a certain area, you will definitely spend less money paying your mortgage over the next few years than you would in paying rent in the same place. The operative phrase, however, is “settle down.” If you truly want to own your home, and stay in it for the foreseeable future, without necessarily trying to resell it at a higher market value, then it would be more advantageous to buy the house than to rent it.
What are the other advantages of buying a home? Obviously, the mortgage will eventually be paid off, which means at some point you will no longer be paying for the house, and your income can go into another venture such as an IRA or another investment for retirement.
If you own a home, you do not need to consult with anyone regarding remodeling, or redecoration, including landscaping. You can design your living space to be as elaborate or sparse as you wish it to be, or change it every few months, as my mother is so fond of doing.
One of the biggest advantages of buying/ owning a home is the tax breaks. Once you acquire a home mortgage, according to the IRS, you are then eligible to declare the interest as deductible on your taxes, which could equal more than the standard deduction and cut you a significant amount in income tax owed. In order to do this, you might need to work with an expert identifying itemized deductions as they relate to your mortgage interest payments.
In the end, buying a home will only be more advantageous than renting if you are in the right position to do so at the right time in your life, financially, and personally.