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Chapter 2: Renting vs. Buying

There are many advantages to owning your own home, it’s just a matter of determining what’s right for you.


As a homeowner, you'll be able to:

  • Build Equity. Since your principal balance decreases and your actual cash equity in your home grows over time, your mortgage payments are a sound investment from the very moment you buy. You build cash equity in your home as you pay down the principal on your mortgage—historically most homes rise in value. When you decide to sell your home, the profit from your home’s appreciation is tax exempt up to $250,000 (always confirm with your tax professional).
  • Stabilize Your Monthly Expenses. Fixed-rate mortgages are more stable than rent, which usually increases annually.
  • Reduce Your Tax Burden. The interest you pay on your home loan and property taxes is tax deductible. Profits from the sale of your home are tax free—unlike most other investments.
  • Exercise Personal Choice. You can decorate and remodel your home to fit your own personal tastes and lifestyle.
Renting vs Buying - Should I Buy My Home?.

Know the Advantages

There are several advantages to owning or renting property. Before you make the decision to buy, consider the following pros and cons.

Buying

  • Equity - You build equity in your home as you pay down mortgage principal.
  • Investment Profit - Many homes increase in value over time.
  • Lifestyle Freedom - You can remodel and redecorate to your liking.
  • Tax Relief - Mortgage interest is tax deductible, and home sale profits are tax free (up to a certain amount).
  • Investment Risk - Property values may decrease.
  • Reduced Mobility - You generally have to sell the house before you can move.
  • Unplanned Expenses - You are responsible for all repairs and maintenance.

Renting

  • Less Work - here is generally less work in maintaining a rental unit.
  • Less Cash - You need less cash up front to rent.
  • Cost More - You pay the property owner’s expenses plus additional money they keep as profit.
  • No Equity - You build no cash equity in the property..
  • Lifestyle Limitations - You are limited in property and interior decoration options.
  • Lack of Stability - Your rent can rise annually.
  • No Tax Deductions - None of rent is tax-deductible.

Ready To Get Started?

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