Buying a home can be one of the most exciting and nerve-wracking steps you will take in your life. On one hand, you’ll get to move into your dream home and start filling it with furniture, creating memories and calling it your “forever home”. On the other hand, you’ll take on a huge financial commitment, and you won’t have any equity in the home once the mortgage is paid off. If you’re looking to buy a home, here is an overview of the pros and cons of buying a home.
What’s the Cost of Buying vs. Renting?
In many areas of the country, especially coastal regions, buying a home can be quite expensive. If you’re wondering how buying a home compares to renting, here are a few facts to put the cost into perspective.
The U.S. median home value in December 2018 was $223,800, according to RealEstateDB.com. At the same time, the U.S. median rental price in December was $2,160. That means that a typical home in the country costs more than twice as much as a typical place to live – and that’s in a place with a robust economy and historically high home values!
If you want to buy a home that’s more affordable, you’ll likely have to move to a less expensive area. In fact, a study found that the most affordable cities in the U.S. are mostly located in the South and West.
Buying a Home: The Biggest Benefit
There are many reasons to buy a home, but the biggest one is simple: it’s your turn to own a piece of real estate! Owning a home provides a secure investment, and in some areas of the country, it’s a sure bet. If you want to buy a home for investment purposes, you’ll likely want to avoid areas where home values are likely to decline.
Renting: Not Such a Big Benefit
One of the main benefits of owning a home is the tax break that comes with it. When you own a home, the IRS looks at you as if you are the owner of the house. This means you can treat the income from that house as your own, which is commonly known as “pass-through” taxation. On the other hand, when you rent, you are treated as the renter of the house, and you must include that income on your taxes as usual.
Buying a Home: The Biggest Drawback
Buying a home is often a huge financial undertaking, and it’s not without its risks. To save money, you can go down to the courthouse and file the papers to become the owner of a home. This process is known as a “short sale” because it can take as little as 60 days! However, buying a home often means taking out a sizable mortgage, and that’s where most of the negative aspects of buying a home come into play.
Renting: The Final Verdict
In the end, the decision to buy or rent is up to you. But one thing is for certain: renting a home is much less expensive than buying one! So, if you’re looking to buy, renting may be the best option for you. And if you’re looking to rent, there are plenty of great options out there. Your friendly neighborhood mortgage broker can help you find a great deal on a home.