Homeownerhsip isn't right for everyone, but if you are wondering whether you should rent or buy, here are some reasons that explain why it can be better to own rather than rent.
1. MORTGAGES ARE CHEAP, monthly payment could be lower to buy than rent
Even though mortgage rates are about 1% higher than they were last year at this time, 30-year mortgages are still in the 4% range, historically very cheap! It could cost less to buy rather than rent a comparable property. I found a 3BR/2BA/1GAR house for rent in St. Louis Park for $1,625/month… a nice house about the same size for sale at $234,900 with 5% down at 4.625% interest would have monthly payments of about $1,564. Rates are predicted to continue to rise this year so if you are planning to buy, sooner could be better than later.
2. FIX YOUR HOME THE WAY YOU WANT IT
When you rent, what you see is what you get… when you own your home you can fix it the way you want it.
3. NO WORRIES ABOUT HAVING PETS
It can be difficult to find a rental property that allows pets… and if they do, they often add an additional charge either monthly or in the form of a higher deposit.
4. IT CAN HELP YOUR CREDIT SCORE
If you are planning to buy your credit score is likely already good. But your regular mortgage payments become part of your credit report while monthly rent likely will not.
Having equity that can be tapped in case of an emergency can be a big plus… and with home prices expected to rise that equity could rise quicker than you think. Your home equity can also make it easier to get a loan for almost anything else.
6. PAY YOURSELF RATHER THAN YOUR LANDLORD
Even though you should think of your home as a place to live rather than an investment, it still makes more financial sense long-term than renting.
If you pay $1,200 in rent each month for 15 years you will have paid your landlord $216,000. If you own your own home, that money will have gone towards building equity as you pay off your mortgage… and you get to take deductions on your income tax along the way.