7 big differences between renting and owning a house
Keep this in mind before signing another lease:
1. Rents keep rising.
Renting has its benefits. There are times when renting makes more sense—like when you plan to live somewhere short-term, for a few months or years; when you want apartment-style amenities, like a pool and gym; and when you aren’t ready to take on the cost of home repairs and maintenance.
But: Rents have been steadily rising for more than 30 years. You can only expect next year’s rent to be higher than what you’re paying now. A monthly rent increase as little as $30 equals $360 a year, while a $50-a-month bump is $600 more a year. Buying a home gives you the chance to lock in a set monthly mortgage payment (at a fixed rate) that won’t increase.
2. Rental agreements are also subject to change.
It isn’t just the prices that are unstable. Landlords can change their policies when it suits them—a pet could suddenly be deemed unwelcome, putting you in a tight spot. Regulations and laws protect homeowners that don’t always extend to protections for tenants.
As a homeowner, whether you want one cat or ten, no one can ask you for a pet deposit and charge you for damages if or when Snowball uses the doorjamb as a scratching post.
3. Owning could be cheaper.
The numbers don’t lie:
- ATTOM Data’s 2022 Rental Affordability Report showed that owning a median-priced home is more affordable than renting in the majority of counties in the U.S. (This reflects early 2022 numbers.)
- “That means major homeownership expenses consume a smaller portion of average local wages than renting,” ATTOM says.
This may be because, as CoreLogic’s Single-Family Rent Index found, single-family rent recently experienced the greatest growth (year-over-year) seen in more than 16 years. The growth for single-family rent hit its sixth record high in a row. Annual rent growth tripled compared to the year before, and rent increases are only expected to continue.
You could own for less than you rent. Find out how.
4. Owning builds prosperity.
Here are some more helpful numbers:
- In the past year, the average homeowner has accumulated approximately $55,300 in home equity.
- These record equity gains are due to home price (value) appreciation: Owning a home doesn’t just give you a place to live—it also builds your long-term investment.
Home equity describes the money your home earns as you pay down the principal balance on your mortgage and as rising housing prices in your area increase the value of your home. It’s one reason many people prioritize owning property rather than paying to live in someone else’s house. When you’re a homeowner, these equity gains go straight into your pocket, not your landlord’s.
5. Owning gives you creative control.
According to a recent LendingTree study, 63 percent of people say they want to own because they’ll gain more flexibility over their space. Once you own, you can tear up the carpet and refinish the wood floors without asking permission from your landlord. And if you build your own home, you get to choose what that flooring is in the first place.
6. Owning provides a possible source of income.
Maybe you don’t want to become a landlord (which is an option if you buy a house), but you do want the freedom to leave for long periods of time. While you can sell your home and use the equity to purchase a new home in a new location, you can also turn your house into its own money-maker: an Airbnb.
Before you do, just make sure you know the zoning laws in your area and understand the potential for wear and tear on your property.
7. Owning has tax benefits.
Come tax season, you may find you’re not dreading it as much as you used to. You’ll have tax write-offs to thank. Interest on a mortgage can be deducted from the amount you owe in taxes. Other homeowner-friendly tax breaks include deductions for real estate taxes (state/local property taxes), PMI (private mortgage insurance), mortgage points, and medically required home improvements.
Academy Mortgage company