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Should you buy a home or keep renting?

March 13, 2018 By Own NY

More and more millenials are turning to renting instead of buying but should you consider the age-old American dream of buying a home?

Here are the top five reasons you should consider buying instead of renting:

  1. Flexibility to do what you want with the property and truly customize your living environment

Want to change your carpet into wood floors?  Go for it!  Want to paint your toddler’s room pink?  Have at it!  Want to upgrade the kitchen? Add a deck?  Fence the yard?  How about adding an addition to accommodate a growing family?  All yours without needing a landlord’s permission.    By the way, these home improvements will increase the value of your property.

  1. The benefits of appreciation and ability to leverage cash invested

Owning a home is an investment that we would argue is better than most, if not all,  other investments.  With a home, you get the tangible benefit of living in your investment!  The financial benefits are significant too; as a home appreciates, it accrues faster than a stock or other investments because you get the appreciation on the entire value, not just the gain on cash invested.

Consider this, if you purchased $10,000 in stock and it appreciated 2.5 percent per year for five years, you would gain $1,314 and if you sell your position, you’d pay taxes on that profit.   On the other hand, if you buy a $250,000 home  with the same investment of $10,000 down and the home’s value appreciated 2.5 percent per year for five years, you’ve gained $32,852 on top of the $10,000 invested and you wouldn’t have to pay taxes on the gain if you sold!

  1. Benefits from tax savings

As a homeowner, you can deduct mortgage interest and property taxes on your annual taxes.  Using the $250,000 home above, you’d have an estimated monthly cost of about $1,600 including property taxes and insurance.  The tax deductions from mortgage interest and property taxes would save about $350 per month, making your after savings monthly housing cost around $1250.   These savings could make the monthly cost of home ownership similar or even better than renting, especially with all the other benefits that come along with it!

  1.  Rent costs increase while your mortgage payment never does

Assuming you have the standard fixed rate mortgage (most common), your monthly payment will remain the same while a renter risks a rising payment every year.

  1.  Have trouble saving money? Don’t worry, home ownership will do it for you

A portion of your mortgage pays down the principle of the loan monthly, giving you more equity in your home. This principle payment is required as part of the mortgage payment, but it’s really you being required to invest in your own home, so it’s like forced savings for your benefit.  By comparison,  the entire amount of a rental payment goes to your landlord.

Give us a call or text to 716.650.4915 if you’re interested in setting up a free consultation to find out if home ownership is right for you and if you can qualify financially….it takes less money than you might think….let’s talk!

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