Homeownership and renting each have benefits and drawbacks, and deciding which to choose depends on individual circumstances and priorities. Potential benefits of homeownership compared with renting include:
• Building equity. One of the biggest benefits of homeownership is the ability to build equity over time. Each mortgage payment goes toward paying down the principal balance on your loan, which means you are building wealth and increasing your net worth. In contrast, when renting, you’re paying someone else’s mortgage and building no equity, and you don’t own the property. It seems like an easy decision.
• Control and flexibility. As a homeowner, you can make changes to your property that suit your personal preferences and needs — paint the walls, install new fixtures, even remodel the kitchen or bathroom. Renters typically have less control, as they must abide by the rules set by the landlord.
• Tax benefits. Homeownership offers tax benefits that can help you save money in the long run. You can deduct the mortgage interest you paid from your taxable income, which can lower your tax bill significantly. Additionally, you can deduct property taxes and some closing costs associated with buying a home. These benefits can help make homeownership more affordable for many people.
• Stability. When you own a home, you have a long-term investment in the property and can establish roots in the community. This can be particularly beneficial for families with children, as it provides stability and consistency in their living situation. In contrast, renters might have to move frequently, due to changes in rental rates, the landlord’s decisions or other factors outside the tenant’s control.
• Property appreciation. Over time, home values generally increase. This can be a significant benefit for homeowners looking to sell their property and potentially earn a profit. Additionally, as the value increases, so do your net worth and financial stability.
• Pride. Homeownership often is considered a significant milestone in a person’s life, and owning your own property can provide a sense of accomplishment and satisfaction. Also, homeownership can give you a feeling of community and belonging, as you become invested in the neighborhood.
Individual circumstances and priorities will determine whether you should rent or own. However, for those who can afford it and want long-term stability and wealth-building potential, homeownership is a great choice. It’s important to weigh carefully the pros and cons of each option and to speak with a financial adviser or real estate professional before making a decision.
– Joannie Bates is a Realtor for Keller Williams Signature Partners. She works with clients in the surrounding area, with a focus on luxury and investment properties.