Historically, buying a house has been something people look forward to and use as a measure of success, but after the housing bubble burst, the thought of home ownership has made people wary. Fortunately, the market is recovering and we are happy to tell you that buying is coming back! No more doom and gloom; in fact, many analysts are saying that buying is now better than renting. Here is why:
1. Buying is cheaper than renting
Experts are saying that homes are at “historic levels of affordability,” where as rent is up an average of 5%. In nearly 60% of 257 metro areas surveyed, homeowners would reach a “breakeven point” in three years or less. This means if you stay in one place for more than three years, it is financially a better choice to buy versus rent.
2. Mortgage rates are at an all time low
In the past few months mortgage rates have reached record-breaking lows. If inflation increases, chances are we will never see rates this low again.
3. Unlike rent, fixed mortgages can’t go up
Rent rises and falls with the economy, but no matter what happens with the economy, you will always pay the same fixed mortgage rates. With all-time low rates, now is the time to lock yourself into a great mortgage deal.
4. Tax breaks for home owners
Homeowners are eligible for several different tax cuts, the biggest of which is the ability to deduct mortgage interest payments (learn about the “Fiscal Cliff” ramification of this point here). Homeowners can also deduct qualified expenses such as energy-efficient improvements.
5. Forced savings
Mortgage payments are a means of forced saving. Each month you are essentially putting money into a piggy bank (your house), and if you choose to, you can cash in on that investment by selling the house. In contrast, if you rent, you have nothing to show after years of paying rent each month.
6. A home is a security investment
Owning a home means you are in control. You can plan for the future and know that you will have a place to live. Renting means your living situation is in the hands of a landlord. Unfortunately, the landlord decides whether you stay or you go.
7. And of course, freedom
You can paint the walls, choose your service providers, and turn on the heat or AC whenever you want. Best of all, no more worrying about getting your security deposit back. You can live it up and maybe even drink red wine on your white carpet!
For some people, it simply comes down to whether or not you want, or need, the flexibility of renting. If you have been renting simply because you are nervous about investing in a house, the time is right to take the plunge and buy a home.