Deciding on whether to rent an apartment or buy a home has varying consequences from financial aspects, quality of life benefits and considerable cost differences over the long term. Read below to see why buying home might be best for you.
Interest on mortgage tax and property tax may be tax deductible. (ask your accountant)
Building equity. You could use this for a Home Equity Loan.
Any increase in value will go in your pocket when you sell your home.
Tailor your mortgage to meet your financial situation: 30-yr, 15-yr, ARM, etc. There are many ways to make home ownership affordable.
Rent is not tax deductible.
No equity. You have no security against which to take out a loan.
No profit gained when lease ends.
You walk away, no richer, no poorer.
Rent cannot be customized or re-financed. You are most likely never locked in for more than one year.
QUALITY OF LIFE
That Home Equity Loan could pay for your child’s college education or allow you to make purchases for your family.
Your home is your castle, and you can truly make it your own. Decorate however you like: painting, carpeting, removing walls!
Your pets have a yard to play in.
You can try your hand at gardening.
You could use your basement for storage or a game room.
You can finally park your car(s) in the garage.
Paying rent builds your landlord’s bank account, not yours.
As a tenant, you are very limited with what you can do to your apartment. Remember, it’s not yours.
Your pets are often unwelcome, or have limited room to play outdoors.
You can nurture your potted plants.
You are lucky to get a storage closet, for which you might have to pay extra.
Good luck finding parking on the street.
Cost Comparison* over 7 years
Cash to Close: $4,375
Equity Built: $28,800 (1% increase per year)
Tax Benefit: $8,552 (25%)
Cash Upfront: $3,600 (First & Last Months Rent, Security Deposit)
Total Rent: $100,800
Tax Benefit: $0
*Based on $125,000 purchase price. 30 Year-FHA. 4.25% Rate. 5.867% APR. 3.5% Down Payment. Amounts figures are estimates. Actual amounts may vary and will depend on factors such as down payment, rate and credit worthiness among others. Rates subject to change without notice.