To Buy or to Rent What are the Benefits of a Homeownership? This is a big housing question which almost every other person once in their lifetime faces that whether they should buy the home or rent one.
This is a major life decision and it is not always easy to decide it because this will cost you a good amount of fortune. It is all about how much money you will be spending and also about how much you will be saving. It is one of the decisions that will affect your family so it requires much-needed careful consideration as there are plenty of arguments that can be made for each side.
Several factors need to be considered when determining the better option for your lifestyle such as your location, your stay time in that house and the hidden costs of homeownership, etc.
Timing is everything
Once upon a time, in America, buying your house was the epitome of the American dream. After that, there came a boom in the housing business in the late 2000s and home values failed and foreclosures were up. People then learned some hard lessons about the home value and how real estate is linked with the country.
However, homeownership is on the decline in the majority of the USA’s biggest cities, for example, the percent is going down. It was 67 percent in 2000. 69 percent in 2004 and it decreased and in 2016 it was just 62 percent.
But the regulators intervened and mortgage rates dropped to their lowest rates over the last 30 years to under 4 percent in 2016. This has made homeownership more affordable nationally. According to a research platform Trulia, in the 1980s when mortgage rates were grown up to a staggering 30 percent, the median household could only afford about ¾ of the median home price. But it is different now. Now in 2016, the median household could afford a home 1.5 times more expensive than the median home price. The market is recovering slowly.
There is an increase in the home value gain and the inventory is limited. However, as the mortgage interest rates are rising slowly, the average interest rate of a conforming 30-year fixed-rate mortgage jumped from around 4 percent in November to 4.4 percent in January, by cutting down the affordability factor.
According to a research platform, for almost a year as the mortgage rates were down, it was easy for the homebuyers to buy the homes at affordable rates than the previous generations, but now again it is getting difficult.
What are the benefits of homeownership?
For most people, homeownership is still very important and it is recognized as a sign of wealth. Buying a home is considered as the escalator to wealth in America. As the mortgage rates are still relatively low, buying a home is usually easy. Moreover, there are some tax benefits also which you can pay on your mortgage, as well as property taxes and mortgage insurance premiums can be itemized as tax deductions.
Moreover, by owning the home, you have the power and control to renovate your own home any way you like. You can add any kind of tiles, doors, or windows, or anything that you like.
What are the benefits of renting?
Finances are part of the decision equation when it comes to determining whether there are benefits of homeownership or not. But there are some other factors, such as career mobility, flexibility, maintenance is the good reason to rent a home instead of buying one.
This is one of the best things about rent that you can leave the place at a month’s notice and can move to any other city or even country to look for better job opportunities. There are no taxes in that case which you would have to pay. But if you have a permanent job in the city, then homeownership is the better solution.