America is a place like no other. When you come here, you have the expectations, freedom, and safety that no other country offers. American is a land where dreams are born and people, regardless of their circumstances. Can attain their idea of success. For most Americans, part of that dream is becoming a homeowner. However, what are the difficulties that come with homeownership, and why shouldn’t you rent? It makes sense to start with the most significant first. When you think of a house, the first thought of a lot is the cost. Why should I spend $31,000 to begin buying a residence? When I could pay $1,300 for rent. Surprisingly enough, the tax benefits that come with buying a house could make the monthly housing costs cheaper or the same as renting. Taxpaying homeowners are eligible to deduct mortgage interest and property taxes.
Financial Benefits
The average price of a house in America is around $295,000, but we’ll round it to $300,000. A reminder to keep in mind, with a 10% down payment. You’ll have a higher monthly payment than if you spent 20%. On that note, say you purchased a $300,000 house with a down payment of 10%, using a mortgage calculator. The total monthly cost is about $1,751, with $1,156 in principal and interest (using today’s average rate of 3.119 percent), $358 in-home taxes, $105 in insurance, and $133 (entitled to paying when putting less than 20% down) in mortgage insurance. For instance, homeowners who file tax returns every year can deduct up to $10,000. You can deduct $360 every month in taxes. Subtract this from the total monthly residential cost of $1,751, the prepaid tax cost of $1,391. With that said, the average rent cost of a four-bedroom apartment is around $1,600.
A Valuable Asset
In today’s modern age, money is always good to have. Not many understand the networkings of stock markets or have goals to become millionaires. However, a home is a valuable asset most understand. Purchasing a home comes with equity, the cost of your mortgage versus the value of the house. If you plan to live somewhere long term, fixing up the house can gradually increase your wealth, allowing you to buy another home. You only have one life. Why live it in one place?
A Choice of Stability
With all the things this year has brought, it’s been damaging to all industries. Some left without homes, and others without jobs. Being a homeowner gives you the safety of having a permanent home. Landlords can raise the rent to 5% every year. With a house, you can have a fixed mortgage. In addition, Owning your own home means you can adjust it to your liking, and making home renovations can increase the worth of the residence.
Summary
- With tax deductions, mortgage costs can be less or the same as rent
- Rent prices rise, while mortgage prices are fixed-rates
- Long term residency can lead to a valuable asset (5 years+)
- Freedom to create a home to your liking
- Only eligible for equity as a homeowner
In general, a house is one of the most substantial investments most Americans make in their lifetime. It’s better to take into consideration if renting or owning a residence is right for you. Do you plan on staying in one place, or are you more nomadic? However, the benefits of buying a house are more than financial. Buying a dwelling belongs to you, you belong to a community, the memories you’ll make in that house; That’s something money won’t buy.
Alex Capozzolo is a partner of Henry Buys Homes, a real estate company in Jacksonville, FL. He has been writing for the real estate industry for several years. Henry is a licensed agent that operates in the Florida market.
