There are many different options to consider when trying to find a roof over your head. Apartments and condos both have their pluses and minuses but investing in a house is the primary dream for many. However, considering the new median sales prices for homes is $428,700, many potential homeowners choose to start their journey by renting instead.
Making the decision to outright purchase a home, rather than renting, offers many benefits in the short and long-term. Explore these differences to learn why you should second guess renting your next house.
What is the Difference Between Renting and Owning?
Renting a home means you make monthly payments to a landlord, rather than to the entity that provided you with your mortgage. In most cases, you sign a lease with the landlord for a set period of time, usually a year, and make consistent payments to them throughout that period. At the end of the lease, you can choose to renew, go month-to-month, or the landlord may request that you leave.
When you own a home, you have a mortgage, which is a specialty loan geared towards a home purchase. Typically, mortgages are with banks due to the size of the loan. A homeowner will make monthly mortgage payments, with an average mortgage tenor of thirty years, with their house serving as collateral on the loan. Once the loan is paid off, the house is completely yours and no more payments are required.
6 Benefits of Owning a Home Instead of Renting
Making the decision of renting or buying can be challenging due to the high costs of purchasing a home. Along with paying the loan on a monthly basis, a mortgage will come with closing costs and a down payment that make the upfront cost of purchasing a home more than you’re expecting. However, there are six key benefits to seeking affordable houses for sale in Litchfield County as opposed to renting:
1. You’re paying yourself, rather than a landlord
With every payment you make on your mortgage, your equity value increases. Equity is the dollar value of your home that you actually own. For example, on a $1,000,000 home, if you have paid off $600,000 then that is your equity. The more you pay off your mortgage, the more your equity increases. When you rent a home, your money just goes to your landlord and doesn’t build equity.
2. You have more design freedom
When you own a home, you can choose what goes in the home and you can make remodeling decisions. However, if you rent a home then you need to run all changes past a landlord who has complete control over what you can install in the home.
3. Owning a home builds your credit over time
The more on-time payments you make on your mortgage, the more your credit score will start to benefit. While you can report rent payments in some cases, not all home rental situations will allow this. This means you are making monthly payments, as you would with a loan, but you aren’t seeing any credit benefits from it.
4. A mortgage will be cheaper in most cases
In the long run, owning a house will be cheaper than rent because once your mortgage is paid off the major expenses will stop. However, if you rent forever then you will always have a large monthly payment to make.
5. Your monthly payments are predictable
While your rent payments will be predictable over the course of your lease, a landlord could charge more if economic conditions deteriorate. With a mortgage, your monthly payments are locked in over the course of the loan and will never change.
6. You have the opportunity for extra income
There are over 20 million rental properties in the United States, with a good chunk of those being individuals. By owning a home, you can rent it out and make additional income, which can then be used to contribute towards your mortgage payments.
Find your dream home today
At the end of a day, living in a house is a great accomplishment regardless of if you own it or are renting it. For those renting, you can still find ways to put your personality into your household. Speak with your landlord and see what they’ll allow you to do. By owning your home, you have creative freedom without needing to ask for permission, all while building equity in your house. Find your dream home today and take the necessary action to make it your own.
We hope you found this blog post on The Benefits of Owning vs. Renting a Home useful. Be sure to check out our post on Who Likes to Rent a Home? for more great tips!
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