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There are times when renting can be a better option than buying a house. For example, if you’re relocating to a new area in a hurry, it might be wise to find a rental property and get to know the new area before you commit to buying a house in a place you’re not yet familiar with. Renting might also be a better option when you’re certain you won’t be in one place for long. Beyond those situations, however, buying a house is often a better choice, economically. Consider these three reasons why home ownership is more cost-effective than renting.
You Get More for Your Money
In 2018, home values increased by an average of 7% in the Austin market. Consider an example: a home bought for $250,000 in 2018 could sell for $267,500 in 2019, which is a $17,500 return on investment in only one year. Rates are low, and now is the best time to buy. If you can afford it, don’t wait. Plus, depending on what type of mortgage loan you take out, your payment will remain relatively unchanged over the term of your loan (assuming a fixed interest rate). When you rent, your rent can increase year after year depending on your landlord (although the benefit is that you don’t have to pay for upkeep). Additionally, you receive several tax benefits as a homeowner. You can write off interest, property taxes, homeowners insurance, and potentially private mortgage insurance.
You Have a Solid Financial Investment
For most people, their home is one of their largest financial investments and makes up a big portion of their overall net worth. So at the end of your 15- or 30-year mortgage, you will own your home free and clear and it will (hopefully) have increased in value over time. At that point, if you decide to sell your home, you stand to earn a profit that you could then roll into another home. As a renter, you don’t build equity over the long term and if you leave, you don’t get to take any profits with you.
You Can Set Down Roots
Owning a home can be empowering and emotionally rewarding. The money you spend on your mortgage every month and improving your home yields a long-term investment benefit for you instead of a landlord. When you rent a property, you don’t receive any equity for your investment and you don’t have the pride of calling your home your own. Say goodbye to neutral walls and ugly carpet. When your home belongs to you, you can enjoy making each part of it fit your style.
Watch this video to hear what Laurie Roberts, UFCU Senior VP and Chief Lending Officer, has to say about buying vs renting.
Make Sure the Time is Right
If you’re ready to settle down for the long term, buying a home is often a wise choice, and it’s easier today than in years past. You no longer need to save 20% for a down payment. Many home buyers can pay as little as 3% down, so you can potentially start building your future now. Of course, owning a home still might not be the right decision for everyone. It requires a certain level of financial and emotional stability. So before you take the plunge, make sure the time is right for you and your situation.