Owning a home has always been a staple of the American Dream. It’s the white picket fence part that makes us feel like we really made it. However, American culture is changing. We’re starting to see a country where people prefer to rent apartments instead of going the traditional route and buying a house. However, most people agree that buying a house is usually worth it or, at the very least, is worth it for the right people. When you own a house, you enjoy a plethora of financial benefits, and it is usually the right choice if you plan on living in the home long-term.
If you're not sure of the perks you can get from owning a house, here's what you should know about why it’s usually better to own than to rent.
Is it Worth Buying a House: 7 Considerations
Many benefits come with buying and owning a house long-term. Some things that make it worth it for many Americans include the financial benefits of owning a home as well as the freedom that comes with homeownership. Here are some of the key reasons to consider buying a home.
1. Freedom
One of the major perks of buying a house is the freedom it offers compared to renting. When you rent from a landlord, you are limited when it comes to what you can and cannot do to your property. Smoking indoors is a no-no. Making major renovations like adding new countertops is also likely to be a no. Painting your walls or hanging up a TV may also be verboten in some situations, or come with a cost and expectation that you return the apartment to its original state before moving out.
Owning your home gives you greater control over your home’s look, feel, and construction. You might also have a little more leeway when it comes to the noise you’re allowed to make. After all, you don’t have to worry about upsetting a landlord.
2. Tax Benefits
From PMI write-offs to the write-offs you get on mortgage interest, most people who have been considering buying a home often do so because of the tax benefits. Depending on your filing situation, it’s possible to write off a lot of the expenses that you incur from owning a home.
It’s not uncommon to get thousands of dollars in write-offs from owning a home every year. This can lead to a huge increase in your spendable income. Depending on your write-offs, you might end up saving enough money to make home life cheaper than if you kept on renting.
3. Equity
Perhaps the biggest benefit of buying a home is that you’re building up equity each month. When you rent, you don’t get to keep any of the money you spent on rent. It’s given to the landlord, and you don’t build up equity. With homeownership, the money you spend on a home is turned into equity that you keep.
For example, if you’re buying a house and taking out a $2,500 per month mortgage, a good portion of that money is being turned into equity. If you sell the home after five years, you’ll have made $150,000 in mortgage payments, roughly half of which has gone towards building equity in the home, while the other half has gone towards interest. Thanks to your decision to buy the house, you’ll have $75,000 in equity.
4. Potential Profits
Buying a house is a venture that can be potentially profitable in more ways than one. Many homeowners choose to rent out portions of their properties as a way to receive a regular monthly income. A common trend is buying a duplex and renting one unit out. It’s not unheard of for people to use Airbnb to fund their vacations.
Of course, selling a home at a higher price than it was purchased can also be a huge burst of profit as a one-time deal. This is precisely why many people choose to buy homes, “sit on them” for a couple of years and sell them as demand increases.
5. Legal Protections
Buying a house means you are the master of your own domain. You no longer have to worry about dealing with a landlord, and abiding by their rules. Once you’ve bought a home, you make the rules. As a homeowner, you also enjoy more legal protections when it comes to your right to stay in your house. You don’t have to worry about things like a landlord not wanting to renew a lease or trying to evict you for breaking a house rule. Short of having a bank foreclosure or a forceful removal from the HOA, no one can make you move. Even with those circumstances, the chances of having it happen are exceedingly small and involve serious violations.
6. A Financial Buffer
If there’s one thing that we can all agree on, it’s that the price of rent is always on the rise. What you can afford for rent now might be unaffordable later on. Sometimes, it just means a lot to have the monthly bills stay stable and predictable. A home’s price is decided at the time of the sale, so if you lock in a fixed-rate mortgage, your monthly carrying costs will be relatively stable for as long as you own the home.
While this isn’t important to everyone, it can be a significant benefit of buying a home for many as it means that you will know how much you have to pay and how many payments you have to make. Even if the prices of homes go up, you won’t have to worry because you’ll still be paying the same rate you locked in when you bought it.
7. Status
Not all the perks that come with homeownership are tangible or financial in nature. Sometimes, the benefits are a little more intangible. For many homeowners, being able to say that you own your own house is a major boost to their feeling of stability and wellness. Buying your first house is certainly going to be a confidence booster, and you can expect to feel proud of yourself.
Owning your own home means that you get to take a look at something you worked hard towards and saying that you earned it. Moreover, many people tend to view homeownership as a status symbol. It’s a sign of accomplishment as well as a sign of financial stability.
When Is Buying a House A Good Idea?
While it’s clear that there are many good reasons to buy a house, it’s not always going to be a good idea. That’s because there are significant costs associated with buying a home, and for it to be worth it, you likely need to own it for at least a few years. A hard and fast rule is that if you plan on living in the home for at least five years, buying will be a better idea than renting. If you’re not planning on owning for the longer term, or expect to move after a year or two, the closing costs that come with buying and selling will likely make buying a house a bad investment.
Is Buying a House Worth It Bottom Line
Everyone has their own needs when it comes to a home, but truth be told, owning a home is not the right choice for everyone. Before you decide for yourself, weigh out the pros and cons of buying a house. If you can deal with the high upfront cost of going through the homeownership process, then chances are you will find it very beneficial.
Each situation is different, but the truth is that most people will find homeownership to be beneficial in the long term. If you aren’t sure whether it’s right for you, talking with a real estate professional or a personal finance expert might be able to help you figure it out.