Renting Vs Owning

Stop flushing money down the toilet every month! Here’s the case for owning rather than renting:

1. You’ll save in taxes and just the total money spent each year.  See the image below to show you how you can spend $1598 less each year simply by owning a $250,000 home.

New research also suggests that the situation is even better than mentioned above, and the market has recently changed so that in the most of the country house payments are actually cheaper than rent payments BEFORE tax benefits are taken into account!

2. Every month that you make payments, you accumulate equity. In the early years of your mortgage you don’t make much progress in paying down the principle of your loan since most of your payment goes toward paying interest, nevertheless you still get SOMETHING. With rentals, however, you get NOTHING toward equity. Something is always better than nothing, and after several years your equity begins to become quite significant.

3. You’re likely to have significant appreciation gains in a place like Austin. This is where there real money is in real estate! The average price increase in Austin last year was 14%. If we use the $250,000 house mentioned above and you earned the average appreciation, that would be $35,000 that you wouldn’t have had if you’d been renting! Sure, not every area will see that much, but some places will even experience more. History is not always an indicator of future performance, but there are a lot of reasons to suggest that this may continue for awhile. To read more on the subject, check out my past post, Playing The Appreciation Game. Granted, like the stock market, home appreciation isn’t a gain you realize until you sell, BUT it is something that is often considered as part of your net worth and other money can be borrowed against this worth as well. Also, real estate is far more liquid than many people realize. In a hot market like Austin, if you ever need to cash out, it probably won’t take long with the right realtor.

4. The final reason is not monetary at all. Homeowners feel better about where they live and life in general. They have something they can call “mine”, they take pride in improving it, they realize a deeper feeling of home, they feel settled, they put down roots, they don’t have to worry about landlords, they can make changes when they want to… I could go on and on.  “Housing analysts also note the lifestyle and social benefits to home ownership, with studies showing that home ownership tends to lead to better education achievement by children and an increase in community involvement.” (Source: NAR Research)

Wondering what type of house you can afford? Wondering what your payments would be? Wondering what area would be the best to own a home? Wondering how to get the best price on a home? Wondering how to get a loan? Have a thousand other questions buzzing through your mind? Contact me, Jeremy Smith. I’d be glad to help!

CONTACT REALTOR, JEREMY SMITH