Renting vs Owning
Posted on: Jun 29 at 2012 by Rubicon Mortgage Advisors
Uncertain if you should rent or own? Here are the advantages as to why you should be considering owning vs renting your next home:
1. A Sound Investment When you carefully choose a home you can afford, the payoff can be great. Each month when you make your mortgage payment, you’re building equity in a place of your own.
Equity: The difference between the fair market value of the property and the amount you owe on your mortgage.
Example: If the fair market value of your home is $125,000 and your mortgage balance is $119,000, then your equity is $6,000.
The longer you stay in your home-and the more mortgage payments you make-the more equity you’ll have. And unlike most things you buy, a home can actually appreciate or increase in value as time passes, building more equity. (Remember: there’s no guarantee that your home’s value will grow; sometimes home values go down.)
2. Tax Advantages The mortgage interest and real estate taxes you pay are tax deductible, which allows you to deduct part of your housing-related expenses from your taxable income. That can reduce your tax bill. Be sure to consult your tax advisor!
Example: If your taxable income for 2000 was $60,000, and your paid $8000 in mortgage interest and $1000 in property taxes, your adjusted taxable income would drop to $51,000.
3. A First Step As you build equity in your current home, it’s usually easier to afford another home in the future. The equity that you gained while owning your first home can be used for a down payment on your next house.
4. Satisfaction and Security As a home owner, you can decorate and improve your home any way you like. Owning a home can also give you a new sense of pride in your surroundings. You and your family may feel stronger ties to your community.
