OWNING A HOME
1. Building Equity Over Time
Unlike renters, homeowners build equity over time. On most mortgages, a portion of each monthly payment goes toward the loan’s interest. The remainder pays down its principal. (Your lender’s amortization schedule shows the exact proportions, which change over time, for each month’s payment.) Every dollar you put toward your loan’s principal represents a dollar of equity – actual ownership of the property.
2. Potential for Rental Income
Even if you don’t initially think of your home as an investment property, you can turn it into a source of income. This can partially or totally offset your mortgage, tax, and insurance payments on it.
3. More Creative Freedom
As a homeowner, your decorating and home improvement choices answer to no one, provided they don’t break local building codes or violate homeowners’ association rules. You can paint walls, add new bathroom fixtures, update your kitchen, finish your basement, or build a patio or deck to your heart’s content.
4. Sense of Belonging and Community
Since homeowners tend to stay in their homes for longer than renters, they’re more likely to put down roots in their communities.
RENTING A HOME
1. No Equity Building
Unless you’re party to a rent-to-own agreement, every dollar you pay in rent is gone forever. No matter how long you remain in your rental unit or how exemplary a tenant you are, you can’t build equity in the property under a standard lease agreement. If you plan on staying in the same location for more than a few years, buying may be a smarter financial choice than renting.
2. Limited Housing Security
While most jurisdictions have generous renter protection laws that prohibit landlords from evicting without cause. Homeowners don’t face such uncertainty. They can remain in their homes as long as they stay current on their mortgage payments.
3. Limited Control Over Ongoing Housing Costs
Unless you live in a community with rent control laws, your landlord has the ability to raise your rent once your current lease expires. Rental property owners raise rents to match rent increases elsewhere in the market, to compel current tenants to vacate the premises rather than sign a new lease, and for many other reasons
For more details on owning a home, schedule an appointment and talk to one of our professional agents.