In life, being willing to make a change is critical for enjoying greater financial success.
At times, renting has its benefits. You may rent an apartment or house for its location or the ability to split payments with roommates. Yet, there comes a point when the rent cycle may be hurting you financially.
The decision to move toward buying over renting can offer you these financial benefits over time.
Choose Upgrades That Save You Money
Rental homes and apartments typically limit the types of work that you can do on the property. For instance, you may not be able to invest in solar panels or upgrade to an energy-efficient HVAC unit.
With a home, you can plan upgrades that increase the energy-efficiency of your home so that you save on heating and cooling costs each season.
Enjoy Greater Tax Benefits of Buying Over Renting
Homeowners are potentially eligible to choose a mortgage interest deduction when they do their taxes. In most cases, the majority of homeowners are able to deduct all of their mortgage interest.
This deduction also currently applies to interest payments made on loans for both primary residences and second homes.
Since tax laws change from year to year, you will need to consult with a professional to know how much savings this will bring you. However, this deduction helps to offset the cost of any interest that you pay on your mortgage annually.
If this is your first year filing taxes after buying a home, then you may also be eligible to claim things such as closing costs for even more savings.
Skip Annual Rent Increases
Today’s housing market has created a situation where property managers often increase the rent on a property each time a lease is up for renewal. This means that you could be paying more to live in a house that is a whole year older with depreciating appliances.
Once you sign on a mortgage loan, your payments will stay mostly the same each year. Being able to watch your payments stabilize as rental rates rise means you can save more money each year as a homeowner.
Gain Equity With Each Payment
In most rental agreements, all of the money that you pay goes straight to the landlord and property management company. This means that you will never see any of it returned to you in the future.
When you make a house payment, it goes toward paying down the mortgage loan and results in equity. Equity is the market value of your home with the amount that you still owe subtracted, and represents your percentage of ownership.
Build Wealth Over Time
Buying a house requires you to commit to a large investment. This can sometimes make it seem as though renting is better.
However, being able to save money on bills and future housing costs allow you to sock money away for the future. You can also strategize your home purchase so that your new house gains in value over time so that it may be worth more than you invested in the beginning.
For the average homeowner, buying a home is the biggest investment that they will make in their life. Our loan specialists are here to help you make sure that you receive the optimum financial benefits from your decision. Breaking the rental cycle can give you better financial security while also upgrading your quality of life.