Home Sweet Home
Introduction
Some choose to rent for the extent of their life while others are sold on homeownership. Is there truly one that wins? This decision is a gray area of life, beckoning us to weigh the costs and come to a decision that aligns with our finances, values, and lifestyle.
Renters POV
- Renters typically have more financial flexibility in the short term, due to the lower upfront cost compared to a down payment for a home. The average rental rate in the US is $1,536 a month compared to a median down payment of $34,248 or average of 14.4%.
- Renters have zero property taxes and maintenance expenses. This is convenient to have a landlord or maintenance staff prepared at your beck and call to replace your refrigerator or fix the garbage disposal – a luxury homeowners’ do not typically have without a much higher cost.
- Renting also has the advantage of lease terms. Renters typically do not feel as tied down to a geographic location compared to homeowners. This is beneficial for people who have travel goals or a lifestyle that requires you to move frequently.
- Renting typically lends itself to predictable monthly expenses. Homeowners have more unexpected costs that surface because they are responsible for the upkeep of their home.
- Renters have less responsibility regarding their place of residence, when compared to homeowners. The rental property is responsible for the upkeep, requiring renters to merely maintain and notify of any issues with their apartment. Homeowners carry this extra burden of responsibility to manage their homes.
Homeowners POV
- Owning a home can create more room to save for retirement, home improvements, travel, and other goals you may have. Once you own your home you have more margin in your budget for other things you want to prioritize.
- Owning a home creates more opportunity to build community because neighborhoods tend to have the same people who live there for extended periods of time. This is shown to benefit children as well, because their home is a place of consistency and stability.
- Rental rates have increased dramatically and are typically more volatile than mortgage rates. This is something to consider in determining if homeownership is right for you.
- Decreased tax burdens are prevalent in homeownership, because you will not receive tax breaks for renting. The IRS offers tax breaks to homeowners specifically, creating a window of opportunity to experience tax relief.
- Owning a home means that you may build equity. Every mortgage payment adds to your home’s value, creating the opportunity to tap into that equity if you need cash. Owned properties can also be rented out later, becoming a greater investment. Homes also increase in value over time, meaning you may be able to profit from selling your home.
- Homeownership also allows for creative freedom. There is a sense of pride in making all the decisions regarding your home. It is truly yours. You get to decide the paint on the walls, the décor, the landscaping, additions, and all the little details in between.
- Homes can be more affordable when purchased outside of populated cities. We have more freedom than ever to work remotely or hybrid, allowing workers to extend their place of dwelling beyond city limits.
There are so many factors to consider when making this decision. Keeping up to date with the renters and housing markets, and being aware of the advantages and disadvantages, can help your home truly be sweet.
Matt’s Corner
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