Many people are caught between the dilemma of whether to buy a home or rent it. The answers are not easy because each individual’s situation is different, and the answer may also vary depending on the current market rates for buying and renting at any given time. However, with real estate rates at fairly low levels today, buying a home offers a much better opportunity in many ways than renting for most people.
Sense of belonging
Almost everyone has a dream of owning their own home one day. Owning a home gives a sense of permanence and ownership to a family. For many homeowners, the value of home ownership and the peace of mind that comes with it is priceless. Aside from the financial benefits, there is an inherent sentimental value associated with owning a home that cannot be evaluated in monetary terms.
Sense of financial security
When you own a home, it becomes long-term financial security for you and your family. It is a safeguard against future uncertainties of inflation and other economic conditions. If construction costs and rents rise unexpectedly in the future, the owner will not be affected by such sudden conditions.
Fiscal benefits
In many cases, the interest payments on the home mortgage and even the property tax amount may be deductible from your income tax. Therefore, if you pay installments on your house instead of paying monthly rent, you can build your own house without too much of a burden on your financial capacity.
Capital Appreciation Potential
If you have purchased your home during unfavorable market conditions when prices are around low levels, it is likely that you will benefit in terms of capital appreciation over a period of time. A prudent investment can allow you to accumulate or earn a strong and sizeable return, which you cannot expect in the case of a rental home.
Better financial planning
If you’ve taken out a fixed-rate mortgage, you know exactly how many future installments you’ll have to pay for what amounts. You can plan your monthly budget accordingly and keep proper and proper control over your finances. This may not be possible as easily in the case of the rental option because the rent is not in your control once the lease term ends.
Enhanced Credit Opportunities
Homeowners often have a better advantage when they need to apply for loans in the future. A homeowner can build equity over a period of time and borrow against that equity when needed. Credit card companies and other private lenders often favor homeowners for credit and loan disbursements.
Private Mortgage Insurance*
If your down payment on your home is less than 20 percent of its sales value, you can get private mortgage insurance (PMI) from your lender. PMI helps you purchase a mortgage with a lower down payment by protecting the lender against any default on your loan. PMI offers a great advantage to people who want to own a home rather than rent, but do not have substantial funds available for a larger down payment.
Resource:
* http://www.bankrate.com/finance/mortgages/the-basics-of-private-mortgage-insurance-pmi.aspx