Many people are caught between the dilemma of buying a home or renting one. The answers are not easy as each individual’s situation is different, and the answer may also vary depending on the prevailing market rates for buying and leasing at any given time. However, with real estate rates at fairly low levels right now, buying a home offers a much greater opportunity in many ways than renting for the majority of people.
Sense of belonging
Almost everyone dreams of having their own house one day. Owning a home gives a family a sense of permanence and ownership. For many homeowners, the value of owning a home and the peace of mind that comes with it is priceless. Besides the financial rewards, there is a sentimental value inherent in owning a home, which cannot be measured in monetary terms.
Sense of financial security
When you own a home, it becomes long term financial security for you and your family. It is a hedge against future uncertainties of inflation and other economic conditions. If construction costs and rents increase unexpectedly in the future, a landlord is not affected by such sudden conditions.
In many cases, mortgage interest payments and even the amount of property tax may be deductible from your income tax. Therefore, if you are paying installments on your home rather than paying monthly rent, you can build your own home without putting too much strain on your affordability.
Potential for capital appreciation
If you bought your home in dreary market conditions while prices are hovering at low levels, there is a good chance that you can benefit in terms of capital appreciation over a period of time. A prudent investment can allow you to accumulate or earn a net and considerable return, which you cannot expect in the case of rented accommodation.
Better financial planning
If you’ve taken out a fixed rate mortgage, you know exactly how many payments you will need to pay in the future for what amounts. You can plan your monthly budget accordingly and maintain proper and proper control over your finances. This may not be possible so easily in the case of the rental option as the rent is not in your control after the term of the rental agreement has ended.
Improved credit opportunities
Homeowners generally have a better advantage when it comes to applying for loans in the future. An owner can build equity over a period of time and borrow against that equity as needed. Credit card companies and other private lenders generally favor homeowners for the disbursement of credit and loans.
Private mortgage insurance *
If the down payment on your home is less than 20 percent of its sale value, you can get private mortgage insurance (PMI) from your lender. PMI helps you acquire a mortgage with a lower down payment as it protects the lender against any default on your loan. PMI offers a great benefit to people who want to own a home rather than rent one, but don’t have the substantial financial means for a larger down payment.