A hot topic and big question lately: is buying better than renting or vice versa? Each has its place in the economy and the market, but, overall, the benefits of buying a new home outweigh those of renting.
Here are a few reasons to point out when explaining this to your PA real estate clients:
Why buying is better…
- Ownership or equity – When a home is purchased and a mortgage acquired, homeowners have the immediate advantage of paying into something that they actually own. In contrast, renters continually pay into a property which they will never own.
- Tax deductions – Homeowners have another advantage that goes along with a mortgage, and this advantage is qualifying for a tax deduction on mortgage interest. A deduction is exactly how it sounds; it lowers average monthly costs of owning a home. The advantage of this, other than saving money, is that homeowners can own more home than they could previously afford.
- Appreciation – Over time, property values can rise. The selling price has the potential to be much higher than the original purchase price, which translates into more money for a homeowner.
- Locked in monthly payment – Despite what the market does, a mortgage payment won’t change. In addition, home appreciation can push up rent prices over time making that set monthly payment for a 15 or 30 year mortgage very attractive
- Interest Rates – In this time of low interest rates, loans are very cheap. Buying a home right now can mean a much lower monthly payment.
- Stay within budget – Be sure to compile all monthly expenses, monthly mortgage payment, insurance, etc. and know exactly how much it will cost per month. Then, weigh this in consideration with monthly income. Don’t buy more than you can afford because too high of a mortgage payment can severely limit resources for other expenses in a similar way that rising rents would.
- Talk to the experts – Don’t go blindly into a situation without consulting an objective third party. Talk to close friends or family who’ve been through this same process, meet with a credit counselor not associated with a lender or attend some classes or seminars about home buying.