Rent vs buy sounds like a pretty cut and dry question. Just choose one or the other. Easy answer, right? Well, not so much. There are so many areas to compare when it comes to this decision such as

• Desired lifestyle
• Maintenance
• Goals
• Payment
• Inflation protection
• Wealth creation vs minimal responsibilities

Rent vs Buy – Which Works for You?

Then, it may just come down to does a buyer want to own a home. Basically, does a buyer want to have control of their home or all the control belongs to a landlord. So, are you about to make this decision of rent vs buy? Getting ready to determine a place to call home? When it comes to each, there are advantages and disadvantages. But, there are a few key reasons why buying a home often outweighs the decision to rent.

1. Build Your Dream Home

One of the greatest luxuries of owning a home, is the option to customize your living space from floor to ceiling at your own leisure. Want to knock out a wall, add a splash of color, install a wet bar, replace carpets with hard wood flooring, create a home office, or add a nursery? The possibilities are endless when you have the opportunity to build your nest according to your plan. Not to mention, as life changes, families grow and tastes change. Owning a home will give you the flexibility to adapt your space to fit your lifestyle.

In the rent vs buy comparison, none of this could happen for renters. Basically, a tenant must ask the landlord to make structural changes and chances of that are practically zero.

2. Opportunity For Rental Income

As a homeowner, there are potential opportunities to have a rental income immediately or convert to a rental down the road. While renting out an entire home may not happen, an owner may offer a cozy guest room that would be a perfect fit for a roommate or an Airbnb guest. One thing to keep in mind is that many rental properties start as a primary residence. It may even be a first time home, which usually converts nicely to a rental property. Choosing to rent out a home instead of selling is making the decision to build an income stream and wealth over time. Plus, many buyers may qualify for a new home using the new rental income as part of the qualification. Another easy win for owning in the rent vs buy comparison.

3. Tax Deductions

There are several tax deductions for homeowners that may result in a higher tax return including: mortgage interest, property tax deductions, (PMI) private mortgage insurance deductions, vacation home tax deductions, energy efficient upgrades, and etc. Although, beginning with 2018 tax returns, the much higher standard deduction makes homeowner deductions tough to use. But, the higher standard deduction may help home buyers more easily afford a new home. With the new tax laws, the rent vs buy comparison is pretty close until one gets into a higher price range. A tax professional can advise which how tax laws affect a potential homeowner. Ask your mortgage lender if they have any recommendations of tax professionals they know and trust so you can be sure you are working with a trusted adviser. In case of a potential quick move after buying or looking to sell for a quick profit, make sure to understand the capital gains and the home exclusion rules.

4. Lock in Long Term Low Interest Rates

Interest rates are still historically very low. Now is a great time to take advantage of these rates. By locking in a rate now, it protects homeowners against inflation. Conversely, renters will continue to pay higher rents as inflation, eventual higher mortgage rates, and home prices push rent rates higher every year. Although, a fixed rate mortgage keeps the same principal & interest payment for the life of the loan. Only the property taxes and insurance may increase. Setting a payment for an extended amount of time is another win for owners in comparing rent vs buy. Consult your OVM Financial mortgage professional to discuss available terms.

5. Build Wealth with Equity

Buying a home is an excellent way to build equity. Home equity across America is now valued in the trillions of dollars and equity is a way to build wealth. Furthermore, homeowners may borrow against home equity for many reasons. For instance, if a parent was planning to help their son or daughter through college, the homeowner could use the equity in their home to take out a loan to provide the funds for their children’s education. Other uses include home improvements and bill consolidation.

6. Stability and Sense Of Belonging

There’s a sense of permanence to living in an owned home versus renting. It’s more likely that a homeowner will stay in their home for much longer than the average renter would. This brings about a sense of belonging and establishment. Homeowners and their children are more likely to feel connected to their neighbors and surrounding community when they stay in their home for a considerable amount of time. Employers actually prefer homeowners for the same reason. Renters have a higher chance of moving a distance, where homeowners stay longer. Employers have a better chance of retaining employees who own vs rent.

Still Worried About Buying?

Sure, buying potentially means greater control, wealth, home choices, and chance of making it your own. Yet, what if something breaks and there is no landlord to fix it? Assuming they would have. First of all, make sure to have a home inspection and pest inspection completed prior to closing. Even though these will not guarantee future issues, they are great predictors. If there are issues found, the buyer may request correction by the seller.

Next, it is worth considering a home warranty. Often a seller will pay for the first year too. The purpose of the home warranty is to cover certain systems within the house such as HVAC, roof, plumbing, electrical systems, appliances, and more.

Worried about having enough down payment? These days, there are many options to cancel this worry. Solutions include VA no money down loans, USDA no money down loans, and down payment assistance. Along with no down payment, these programs also offer fixed interest rates and are very affordable options.

All in all, buying a home is not as scary as it may seem. The key to a successful purchase is having the right team of experienced professionals to have you navigate the home buying process. Before buying a home, take some time to call our team of professionals.

At OVM Financial, it is our goal to make the lending process seamless. We understand that there is no bigger financial decision made in a person’s life than that of home ownership. OVM exists to ensure that the outcome of each transaction is smooth, informative, on-time and life changing. It is our goal to become our client’s mortgage provider for life, by treating the entire process with the respect and care it deserves.

By OVM Financial Mortgage Writer/Blogger