Why some people choose to rent:
• Major repairs are the landlord's responsibilities.
• Moving to a new location can happen quickly when the lease is up.
• Nearby neighbors provide security if you're in an apartment complex.
• Monthly expenses are more predictable when major repairs aren't an issue.
• Having money to buy and move into a home doesn't seem affordable.
The benefits of being a homeowner:
• Being a homeowner is part of the American Dream.
• Making mortgage payments is like having a savings account that accumulates savings (equity) for the homeowner, not the landlord.
• Mortgage interest and property taxes are tax deductible, rent is not. Home values appreciate each year making home ownership a wise financial decision putting value into your investment portfolio. As an example, let's look at the purchase of
a $200,000 house putting 20% down ($40,000). At an appreciation rate of 5% annually, a $200,000 home would increase in value $10,000 the first year. That means the homeowner earned $10,000 in one year with just a $40,000 investment. In
fancier investment terms, that makes the ROI (Return on Investment) 25% the first year! What stock or money fund has produced that kind of ROI in the last few years?
• Added to the appreciation value are the tax deductions allowed. Let's assume the mortgage interest and property taxes on the $200,000 home are $15,000 in one year. That means the homeowner's taxable income is reduced by $15,000.
That's something significant to make any tax payer smile!