Many people think they can’t afford to buy a new home. But the homeownership rate in the U.S. is nearly 69 percent — indicating that homeownership is within reach for more Americans than ever before. Owning a home can be as affordable as renting, and in some cases more affordable.
Advantages of Owning a Home.
• Pay the same, or even less, while building equity (the difference in how much the home is worth over how much you owe on it).
• You may be able to save on your federal taxes by deducting the property taxes and interest paid on your mortgage.
Area Cost Comparison.
You can compare the costs of owning and renting by doing some basic calculations.
Cost to Own.
Use a payment calculator to get the total for principal and interest payments.
To add taxes and insurance per month into payment calculator. Check with the local property tax assessor to get an idea what the annual real estate tax would be on a home in your price range in your area. Check with a local insurance agent to get an idea of the annual homeowners hazard insurance cost. Divide each of those two numbers by 12 and add them to the principal and interest to get the estimated total monthly payment.
Cost to Rent.
Using an apartment search Web site, such as www.apartments.com to locate a comparable apartment or house in the same location that is available for rent.
• Build equity — your wealth will increase as you gain equity
• Gain tax advantages — property taxes and mortgage interest is tax deductible. For more information visit www.irs.gov/publications/p530/index.html
• Stabilize your payments — monthly payments are relatively steady if your loan has a fixed interest rate, while your landlord can increase the rent
• When mortgage payments are made on time, the homeowner can achieve a better credit rating.
• A home provides a permanent place where your family can live and grow, and you can decorate or expand a house the way you like to create your dream home.
• Homeowners often are more involved in the well-being of their communities; many homeowners work together for better schools and less crime
Sources: homeloanlearningcenter.com, Mortgagecalculator.org
Home Ownership vs. Renting
By: Flagship Construction04/10/14
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