Home equity is one of the biggest assets to buying instead of renting. In addition, most buyers can obtain tax benefits by writing off real estate taxes, mortgage interest, and specific closing costs, whereas renters don’t typically get federal tax deductions. Although, some states will offer a tax break for renters.
In addition, house renters often don’t realize that they’re paying the principle, interest, taxes, and insurance (and usually some extra padding for landlord repairs) in their monthly payments, which could be put toward building equity in their own homes.
Newlywed Leslie Radigan-Yodice of Albuquerque, New Mexico, initially thought she and her expanded family would move from an apartment into a rental home, but after figuring out the finances, they decided in the summer of 2014 that it was a great time to buy.
“My monthly payment is about $300 more, but we have a four bedroom, two-bath house with a garage,” she says. “I love that we’re building equity while creating a true home. And I love that I don’t have to walk across the street to do my laundry.”
Sometimes, the decision to own a home comes down to certain intangibles.
“While there’s definitely a strict financial answer to whether it’s better to rent versus buy, don’t discount the emotional part of the process,” says Deb Agliano of Re/Max Andrew Realty in Medford, Massachusetts. “For some people, it’s not a matter of what makes more financial sense, emotionally they want to know that they own their own home.”
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Mary and Garret Goetzinger of Portland, Oregon, say owning their four-bedroom Craftsman is a welcome change after 15 years of renting.
“Being able to create your own space and freedom to design it however you want is a positive,” the couple agree, noting that they did have to move a little farther out than they anticipated to get the house they wanted. “Owning a home isn’t cheap, and we’re on the hook if something goes wrong.”
Handling the maintenance, upkeep and repairs is one of the biggest differences for Janice Pare and her husband Gordon Wichern, who recently purchased a three-bedroom Cape Cod in Arlington, Massachusetts.
“One other negative is the lack of flexibility to move whenever and wherever we want with just 30 days notice,” Pare says. “But we feel that being homeowners makes us more invested in our community, and we plan to get more involved in our new part of town.”
Deciding to buy a house is a big responsibility, and potential homeowners need to answer some serious questions before taking that leap, says real estate agent Dianne Hansen in Fairfax, Virginia.
“Will it give you a sense of pride?” she asks. “Are repairs stressful or something you’re willing to learn to do? How long will you be in the house? If it’s less than two years, it might not be worth buying. If you’ll be there five or more years, it’s a good bet.”