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Benefits of Owning vs Renting a Home

To finish off 2022 I want to talk about the benefits of owning a home as compared to renting. I hope this blog post doesn’t come off as a lecture, though there’s no doubt where I stand on this issue.

Still, I realize that not everyone is ready or in the best position for home ownership. But I hope to persuade those on the fence about owning, and maybe inspire those who aren’t ready to start working towards being able to buy in the near future.

As a real estate agent it shouldn’t come as any surprise that I think owning a home is far better than renting. But I’m going to push through the obvious bias here and explain my position because I think by the end of this post that you too will agree with me regardless of your experience with real estate.

The benefits of owning a home versus renting are significant. So let me go into a few details and explain why I’m so passionately in favor of home ownership.

The biggest benefit with home ownership is that you own equity in the place you live. Most people consider buying a house a life goal. They picture their dream home to start their family and the rest of their lives.

This is great! But along with the intangible values of finding your dream home, you should also see buying a house as a long-term investment. Unlike your car, which depreciates in value over time, your home gains value year after year.

Though rates vary, since 2012 home values have increased on average 7.7% every year. That means if you bought a house ten years ago for $100,000, in 2022 your home would be valued at $208,698.

Simply by owning a home, your net worth will have at least doubled.

Keep in mind, the more money your home is worth when you buy it, the amount of equity you yield over time is exponentially greater. (For example, if you bought your house for $400,000, expect a ten year return 4x greater than the number above).

Some people see a mortgage payment and paying rent as the same. But they are completely different.

When you pay your rent, you are giving your money to a person (or property management company) for permission to live at their property.

When you pay your monthly mortgage payment, you are paying down the principal and interest on your loan.

This means that every month you owe less and less on your home. So while your home increases in value year after year, you’re also increasing your share of ownership on the property.

(Just a quick note, part of your mortgage payment may also go toward property taxes and, depending on your loan agreement, toward other expenses such as home insurance or Private Mortgage Insurance, known as PMI).

You might be thinking, “Well, that all sounds great, but I can’t use any of that equity unless I sell my house!”

This is partly true. Your home’s value is just a number. You won’t see a giant sum of money piling up in your bank account unless you actually sell your house.

But the equity you gain in your home over time can still be a great asset for you. Home equity lines of credit offer you an opportunity to borrow at low interest rates.

Should you want to build a nice addition to your house but don’t have the cash up front, you could pull money from an equity line of credit to allow you to pay for an expensive home improvement project.

This brings me to the next benefit of owning a home, which is: money spent on your house increases its value!

Replacing your bathroom or kitchen and making a place more to your liking not only makes your home a better and nicer place to live, it also increases your home’s value. Sometimes the costs on home improvement projects can be offset by the value gained on your home, even.

The last benefit of home ownership over renting that I want to discuss is the predictable monthly payments that come with a home mortgage.

Although your monthly payment may change throughout the life of your mortgage, the changes are often small and can sometimes decrease over time. (This is especially true if you have to pay PMI at the start of your mortgage).

When you rent, your monthly payment is subject to your lease and the property owner’s whim. Although some municipalities and states do put a limit on allowable increases to renters, your monthly rent is always subject to the property owner.

Adding to a renter’s insecurity is that their tenancy is also subject to the property owner’s whim. If the owner sells or decides he doesn’t want the current tenants anymore, they can decide not to renew a lease and the occupants will be forced out.

Buying a home and owning property takes away these insecurities, stabilizing your monthly payments and also giving you the control to live in your place.

Of course, owning property comes with its own risks and insecurities, but things like insurance and equity help to insulate you from liabilities.

From gaining equity to adding more control over where you live and for how long, the benefits of owning a home versus renting are strong. I hope I’ve challenged the opinions of those who up to this point may have been opposed to home buying.

For those who dream of buying a home but don’t think they’re ready, I hope this post has inspired you to start looking more closely at the prospect of entering the real estate market. There are a lot of great financial programs that make buying a home much more accessible.

Buying a home and enjoying the benefits may be much closer than you think!

If you’re curious about the prospect of buying and looking into your options, reach out to me today!

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Melanie Graham

Melanie Graham