Renting vs. buying a home is a decision that many home buyers face. There's certainly no shortage of advice on the subject of renting vs. buying a home, but the final decision can become more difficult to come by for home buyers.
One of the best ways to determine if you should rent or buy a home is to look at the pros and cons on each side of the issue. After reviewing the pros and cons, you can determine which option makes the most sense for you.
The question of renting vs. buying a home usually centers on the following topics:
* Financial considerations (costs)
* Tax benefits
* Overall life plan
Financial Considerations of Buying a Home
For a lot of home buyers, the financial considerations are the most important factors in making the decision. Many potential home buyers are shocked to learn they can buy a home for nearly the same amount as (or even less than) what they pay in rent each month. When the money is nearly equal, the question of whether to rent or buy a home becomes a lot easier to make!
The Home Equity Factor
When buying a home instead of renting, you also benefit from the equity that builds in your home. As a renter, you pay for the right to live in the home for a period of time, but that's it. At the end of the lease period, you have nothing to show for it expenditure, other than the fact you lived in the home for that period of time.
Homeowners build equity as the amount they owe on their home decreases and the value of their home increases. Equity contributes a lot to a person's overall financial picture. For instance, the ability to take out home-equity loans is a major financial benefit to buying a home.
Tax Benefits of Owning a Home
Home ownership comes with significant tax benefits. It's wise to speak to your accountant or tax advisor about the benefits of owning a home and paying a monthly mortgage (instead of a rental payment). Home buyers often receive tax deductions and can also build up equity in their home. This brings greater financial freedom and opportunities.
The Big Picture
A lot of people who choose renting over buying make the decision based on misinformation. For instance, they may think that buying a home is beyond their financial reach, when it's really within reach. When choosing between renting and buying a home, the best thing to do is research your options, speak to professionals, and then make an informed decision.
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