Buying vs. Renting: Which is Better?
Tired of renting and feeling like you’re throwing money away every month? You actually don’t have to keep doing this! Owning a home can easily be within your reach. It’s a common misconception that renting is a convenient and cost-effective way of living. In reality, it’s anything but cost-effective. The truth is, you’re leaving a ton of money on the table and those funds over time can deliver more freedom than the flexibility of a lease ever could.
Owning a home is an excellent investment, plus – it’s one that comes with countless financial benefits. Let’s take a closer look at exactly why owning a home is cheaper than renting.
- Homeownership will help you save more money and build equity
- More stability, control, and protection.
- You can create a passive income by becoming a landlord
- Partner with the best Realtors in Chester County
Homeowners can save more money and build equity
As one of the best Realtors in Chester County, here’s the hard truth: Whether you rent or own, you’re buying a home either way. When you rent, your money goes towards paying someone else’s mortgage.
So, the real question you should be asking yourself is, “Who am I buying a home for, myself or my landlord?” In contrast, when you own a home, each month’s payment increases your equity, which will yield more in appreciation than a savings account ever could. This is the exact reason why real estate ownership creates more millionaires in the United States today than any other financial vehicle.
Maximizing your savings: The tax benefits of owning a home
Yes – tax benefits! From deductions on mortgage interest to deductions on your property taxes – it all works in your favor come tax season. Here’s a break-down of exactly how buying a home will stretch your savings.
Let’s say you have a $1,900.00 monthly mortgage payment. $547.00 of that mortgage payment is equity paydown, AKA appreciating savings. $774.00 of that is interest, which is fully deductible. $506.00 is escrowed for taxes and insurance, some portion of which is also deductible. Of your $1,900.00 mortgage payment, approximately $1,200.00 can be completely written off.
What if you could write-off your rent? Statistically speaking, homeowners get much larger tax returns than renters. When you own a home, all of these expenses become deductions on your tax return every year. The result? A significant reduction in your tax bill. A penny saved is a penny earned, right?
Owning a Home Gives You Stability and Control
It’s no secret that owning a home gives you the stability and control that you’ll never get when you’re renting. With a fixed-rate mortgage and regular payments, homeowners benefit from stability in their housing costs, compared to renters who can be subject to many different variables. Say goodbye to worrying about unexpected rent increases!
If you’re anything like me, you want your living space to look instagram-worthy. Having creative control over your home is important – and it’s hard to do that when you’re renting. There really is nothing that beats owning your own home. It gives you the freedom to tear down walls, add a new bathroom, paint the entire place bright purple, or have as many pets as you’d like without incurring additional rental fees.
But when you’re renting, there are way too many risks associated with making updates or even just decorating. Sure, maybe you can paint in your rental, but that still requires you to paint it back to a neutral color when you move out. You’re extremely limited in your decorating options, let alone the ability to make any major improvements. Without creative control, your rental space isn’t exactly something that screams “you.”
How to Build Wealth and Create a Passive Income Through Homeownership
Owning a home also enables you to become the landlord! You can take the equity out of your home and use that for a downpayment on a new home or on your first investment property.
Another option? Refinancing your loan. Doing this will lower your monthly payment and ultimately increase your cash flow once the property is rented. This is how you’ll build equity! Equity is the difference between your home’s appraised value and the amount of your mortgage payoff, and it increases as you make regular payments on your loan.
Owning a Home to Create Passive Income
With rental properties, you have an opportunity to generate passive income. Your investment properties will also grow in equity over time giving you more opportunities to purchase investment properties and grow your passive income.
Too often, I hear people say that by renting they’re ‘hiding’ from the housing market. The reality is that as housing prices increase, rent prices increase. It’s time to decide if you’re going to do it for yourself or for your landlord. Remember what I said earlier? One way or another, you are buying a house. It’s either going to be your first home or your landlord’s next vacation rental – you decide!
The bottom line is that owning a home is an investment and renters are simply throwing away money. With the right resources, you can achieve homeownership faster than you may think.
Partner with the Best Realtors in Chester County
If you’re ready to take the leap and become a homeowner, partner with the Steve Laret team, the best Chester County realtors. Our team has a proven track record of expert negotiation and finding the perfect homes for our clients. As the top real estate agents in Chester County, PA, we’d be happy to help you navigate your way through the home-buying process. Let’s find you the perfect home that meets both your needs and budget.
Stop wasting money on rent and start building wealth with a mortgage. Contact The Steve Laret team today to learn more about how we can help you become a homeowner.