Many people are hesitant to lock themselves into a mortgage or to put all of their savings into a down payment. Committing to living in one place for a long time might also seem unwise. However, there are several reasons why buying a home rather than renting remains the wiser financial choice. Here are five good reasons why buying a home is a better investment for your future.
1. Buying a home is a long-term investment.
Mortgage payments may be expensive and stressful in the short term. However, paying for a mortgage now will lead to a time when you’re not struggling to come up with monthly payments. If you rent instead of buy, you will always have to worry about making monthly rent payments.
2. Rental rates will only go up.
Mortgage rates may be subject to some increases, but never as dramatically as rental prices. For instance, if you take on a mortgage, you are only subject to fluctuation for the duration of your mortgage. If you rent, you are subject to housing price increases for the rest of your life. Buying a home now means you won’t have to worry about a sudden upswing in rental prices when you’re living off of a fixed income.
3. Monthly payments build equity.
Unlike rental payments, money put into a down payment and mortgage is never really lost to you. Instead, it goes into building your equity. In other words, it remains a financial asset in your ownership that can be liquidated, transferred to your children, or used as collateral. Rent money, however, is good for one month before it’s gone forever.
4. Homeowners can make improvements.
Renters have little control over things like outdated fixtures that waste water, in-efficient heating systems and outdated lighting, but they are usually responsible for the utility bills. Homeowners can update heating, cooling, and water systems and make their money back over the long-term by saving on energy costs.
5. Homeowners can be landlords.
Buying a house as a rental property can provide a source for monthly income. For those who are willing to share housing, renting out spare rooms can cover the cost of a monthly mortgage payment. Owning a home means having a roof overhead, and it can also be a good investment.
Source: Alliance West Mortgage