Owning a home is usually deemed more advantageous in both the short term and the long run.
Buying a home takes a substantial amount of money upfront. However, over time, owning a home is significantly more cost-effective than renting when you look at it in the long term. Here’s why:
Equity and Appreciation:
First, when you own a home, you’re investing in equity. Equity is the difference between what you owe on your mortgage and what your home is worth. As you pay off your mortgage, your equity levels will rise. Furthermore, the value of your home can appreciate over time, and you can make money by selling it in the future. Renting doesn’t offer this ability to build equity.
Stable Housing Expenses:
When you rent, your monthly rent expense is usually consistent, but it might increase at the end of a lease. However, by owning a home, your monthly mortgage payment is more stable. Your monthly expenses will stay the same once you lock in a mortgage rate. This allows you to budget easier and gives you more control over your monthly finances.
Tax Advantages:
Homeowners enjoy tax benefits over renters. Property tax and interest paid on your mortgage are deductions that can lower your taxable income. This can result in a reduction in tax burden each year.
Savings over Time:
Owning a home has additional benefits, including savings passed over time. For example, renters will have to pay an increase in rent year over year. But, as a homeowner, you can refinance your mortgage if interest rates drop or simply maintain a consistent rate. After the mortgage is paid, you will have a substantial savings amount that you can invest elsewhere.
Moreover, according to recent statistics, the average U.S. homeowner’s net worth is approximately 80-90 times higher than that of the average renter.
While homeownership may seem challenging in the short term, it’s evident that homeownership puts you in a stable financial position over time. Homeownership is a solid investment that pays off by building equity, providing a stable environment, and lowering taxes. It is safe to say that owning a home can lead to long-lasting financial benefits.
This real estate column is brought to you by Kylah Artz, a local real estate agent with Texas Urban Living, serving the DFW area.