For most first-time homebuyers, the thought of owning their own home seems beneficial in so many ways. However, if you have been renting for a while and feel comfortable about renting instead of buying, you may be struggling to see the advantages. After all, buying a home does put you directly responsible for things like property taxes and general home maintenance. The fact is, renting a home really doesn't do a whole lot for your financial future, but buying a home actually does. Here is a look at some of the reasons why buying a home is a smarter financial move than renting a home for the long term.
Buying a home can give you an equity line of credit.
When you pay your rent payment every month, that money goes directly to the pocket of the property owner and the only thing you really gain is a place to live for the next month. However, if you have a mortgage loan and make a house payment, your money does more good than simply providing you with a place to live. The monthly payments mean you are paying for a portion of your home. Because you are slowly paying off your home and it is becoming your own, you gain home equity. Home equity is something you can borrow against if needed down the road.
Buying a home can give you tax breaks.
There is no part of the money paid for rent that could be considered a tax deduction unless you are renting a property for business purposes. However, when you buy a home, there are certain tax deductions you will qualify for as a homeowner. For example, you should be able to deduct:
- Expenses you pay on home upgrades and repairs
- Money you pay to cover property taxes
- Interest payments you make on your mortgage loan
Buying a home gives you a tangible investment.
Real estate pricing tends to be on the uptick as time passes, especially in some areas of the country. When you rent a home, you have nothing to show for it once you move out and are ready to move to a new place. On the contrary, when you buy a house, you are slowly paying off an investment in a piece of real estate property that you can sell later on, sometimes at a higher price than what you paid. Even if you only get back what you paid for the home when you decide to move, this is still a large sum of money that can be used toward something else, whether it is a new home or something else.