There are so many great financial benefits to owning a house. Yet I wonder, why do people continue to rent?
Let’s examine why owning a home is the American Dream for so many. As rents continue to climb, especially with the current low interest rates, many people who currently rent their homes are wondering if home ownership is really better than being a tenant?. For the moment, let’s bypass the challenges of saving up the necessary money for a down payment. Let’s look at what the monthly expenses of home ownership are. And if we look at that closely, it turns out that a renter currently paying the average rental price in many areas could probably afford to buy a higher quality, nicer property then they are currently living in. And this is without making their monthly expenses increase.
Here are a few reasons why is financially beneficial to own your own home.
While renal rates are continually rising, mortgage payments can be fixed for a 30-year period. The equity that you build in your home can be a financial resource for later in your life. You can build wealth, and not have to pay capital gains in most cases on your home.
Your mortgage can being a forced savings account. And historically homeowners, over a long period of time, have greater net wealth than renters. I’ve read studies that show that a homers net wealth is up to 45 times greater than a tenant’s net wealth.
While some may argue that when you are a tenant, you do not need to pay the cost of real estate taxes and the home repairs. That would be the landlord’s responsibility.
Others say that you are still paying them, but you were paying them in the form of increased rents.
Bottom line – being a homeowner has always been and always will be the American Dream. And it will be, in the long run almost every single time, financially better than being a tenant.