Owning a home may provide tax benefits by allowing certain expenses to be tax-deductible. These tax-deductible expenses include things like accounting costs, property taxes and mortgage interest. These tax write-offs can provide a financial benefit each year.
Having your own home allows you to have an increased level of privacy over many rental properties. Both in terms of the better building materials that are used to build residential homes versus apartments, as well as having your own space with the ability to make modifications that facilitate privacy such as insulation, fences, foliage, etc.
Owning a home allows you to set up a predictable payment, which helps with budgeting. Whereas, when you are renting, you are at the mercy of the landlord at each lease signing/extension interval. It is not uncommon for rental rates to go up over time, making it tougher to maintain a consistent, predictable budget over time.
When you own a home, you typically have the ability to make any modifications to your home [note: in deed restricted communities, you may have guidelines that apply to the exterior features of your home]. You can make changes and improvements to your home to fit your style and preferences. Even if you are granted the ability to make modifications by your landlord, those improvements ultimately benefit the owner of the property and not you.
Home ownership provides a strong investment for retirement. In most situations, property values appreciate over time. In fact, this can be one of the more lucrative investment vehicles over a long enough time horizon. Although there are points in our history where this was not the case, the majority of homes do increase in value over time with year over year increases.
At some point in the future, the home you own may also provide income potential if you decide to rent it out. You could use the home for rental income down the road to generate a revenue stream, which is valuable especially when rent charged surpasses the carrying costs of the home.
The equity you build in your home can be cashed in or borrowed against to accommodate future financial needs. What you pay each month benefits you versus your landlord. As you get further into your loan repayment, higher proportions of your payment are applied to the remaining loan amount. Home equity loans can be be obtained at attractive interest rates to allow you the opportunity to use your equity to cover other costs you encounter.
Being a consistent, long-standing part of a community builds connections. It facilitates relationships and the ability to get engaged in the community in an intrinsically rewarding way. As a homeowner, you also have a greater influence on your immediate community.
At a macro level, home ownership ends up being more affordable than renting. Certainly, there are some up front costs to purchase a home. However, over the period of time you own the home, your monthly costs could end up being less than renting, and remember a large portion of your monthly costs are building equity versus being a sunk cost. This can be further enhanced when interest rates are favorable.
Being a homeowner is something to be proud of because it is yours. Your worked hard to be in a position to purchase one and it gives you a sense of pride. It can be comforting knowing that it will continue to be yours if you are responsible about your mortgage payments and taxes, unlike a rental where you may have little influence over your ability to continue living on the property.
At the end of the day, the decision and attractiveness of owning a home needs to be evaluated at an individual level. Weigh out your options and your circumstances to determine if you are better to rent or own at any given point in time. Your realtor may also be able to help you assess the options available to you.
NAPLES REAL ESTATE BLOG
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