Advantages Of Owning

Rent or buy? It can be a complex decision to make.

Some people rent a home because they think that they can't afford to buy one. Others like the flexibility that comes with renting an apartment or house.

When you rent, you can live in a neighborhood for as little or as long as you like. You're also free of maintenance responsibilities. Your landlord handles repairs, for example.

But there are many good reasons to own a home.

You build equity! In the early years of a mortgage, the majority of your monthly payments go toward paying the interest. Over time, an increasing amount goes toward reducing the mortgage balance, or "principal." The process of paying off a loan over a set period of time is called "amortization."

As you make payments, you reduce the principal and increase your share or "equity" in your home's value. If your home increases in value through "appreciation" - an increase in the value of a home - your equity builds even faster.

Building equity - or savings - in your home is important. For many people, it lets them plan for retirement, pay for college and achieve other future goals.

You gain tax advantages! When you own a home, you can deduct mortgage interest and property taxes from your federal income taxes and some state income taxes. These deductions can mean significant tax savings, especially in the early years of the mortgage when interest makes up most of the payment. (You may wish to consult a tax advisor for your individual situation.)

After calculating your taxes, you might find that it's cheaper for you to buy than rent! Keep in mind, however, that to gain these tax advantages, you must file an annual income tax return with the U.S. government, even if you're not a U.S. citizen.

You can rely on stable monthly payments! If you choose a fixed-rate mortgage, you'll pay the same monthly principal and interest for the entire term of your loan. (The payment can go up slightly if your taxes and insurance costs go up.) Unlike renting, your monthly payment will stay the same month after month, even when inflation leads to higher prices.

You have a place for your family and relatives to live in and gain a sense of community! When you own a home, you can be secure in knowing that your family, and, if need be, your relatives, will have a place to live. When you rent, you might not always be able to renew your lease.

Owning also gives you an opportunity to get involved in the well-being of your community. You may even feel a greater sense of belonging.

 

Becoming a homeowner

 

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By visiting Allie Mae you have taken your first step toward becoming an educated borrower. Allie Mae is an objective, independent source of information for the mortgage consumer. Whether you are buying a home, refinancing, taking a home equity loan, building a home or in need of a mortgage for any purpose, Allie Mae is here to help. Allie Mae has helped thousands of people with their mortgage needs. We have a complete selection of articles, charts, calculators, and checklists designed to help you through the mortgage and home buying process.

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