How Owning a Home Saves You Money
Buying a home versus renting one can help keep your hard-earned cash where it belongs — in your bank account. Home ownership can save you money in a variety of ways. Here are just a few of them:
- Tax breaks – If you itemize your deductions (which would probably be wise if you’re a homeowner), you can deduct your mortgage interest from your tax liability. If you paid points to get a better rate on your loan, you may also be able to deduct the points. Real estate taxes are also tax deductible. If you work out of your home and you’re a homeowner, you can sometimes deduct a portion of your mortgage as a home office expense. And if you’re making home improvements, keep in mind that many energy saving improvements can also be tax deductible (and save you money on utilities). You can keep more money in your pocket and send less to the IRS each year by owning a home.
- Owning is an investment – If you rent an apartment for 30 years, what do you get when it’s time to move? Hopefully you at least get your security deposit back. Now, if you own your home and decide it’s retirement time and you want to relocate to Florida, you’re going to be able to sell your home and likely make a profit. Putting money towards a mortgage, versus rent, means that you have equity you can borrow against while you live there or profit from when you sell.
- Build your credit score – Having a mortgage on your credit score can be beneficial when trying to build up credit. You will have to have some established credit to be approved for a loan initially, but adding a mortgage to your credit will reflect favorably on your score (as long as you make your payment on time). Good credit means saving money on everything you may need to finance in the future, from a car to a credit card. People with higher credit scores get better interest rates when they need to borrow money. Having lower interest rates on money you’ve borrowed in turn saves you money.
- Learn to budget – In order to purchase a home, you’ll likely have to save a down payment. This activity can teach you to be thrifty, create a budget and stick to it and benefit your financial health long-term. Once you’re in your home, you will have learned good saving habits that you can implement for the rest of your life.
- Rent goes up – As long as you have a fixed-rate mortgage, your mortgage amount will be the same for the life of the loan. You can budget based on that amount and count on it not going up. Rent, on the other hand, tends to creep up a little each year so that you’re paying more for the same apartment (or house), but not getting anything out of the money you’ve put into living there.
As you can see, there are big financial differences between renting and owning. If you would like more information, feel free to call us. We’re not here to pressure. We’re here to help.
Chris Colgan is the CEO and Team Leader of the Chris Colgan Real Estate Team. Chris was born and raised in Gainesville, Virginia and has been in real estate for 10 years. He is a member of the Re/Max Hall of Fame and is in the top 25 for sales in the state of Virginia out of all Re/Max agents. He has been recognized as one of the United States’ and Canada’s Top 500 Marketing Experts by the National Association of Expert Advisors.