The Benefits Of Buying A Home Vs. Renting
Owning a home is often referred to as “the American Dream,” but almost 40% of US households are rented, not bought. Here in Memphis, renters actually make up the majority of residents! While rental rates continue to rise across the country, the benefits of owning a home remain unchanged. Buying your own home is a milestone that offers a sense of pride and accomplishment, of course, but there are also more practical advantages to consider. That's why we're taking a look at the benefits of buying a home vs. renting!
With housing starts expected to increase steadily in 2021 and interest rates likely to remain low, this is the perfect time to transition from writing out a rent check each month to investing in your own home. Let’s take a look at some of the best reasons to consider buying a home in Memphis, Germantown, or Collierville with Judy McLellan & The JudyMac Team of Crye-Leike Realtors!
Rent costs continue to increase
In the South, rent prices are up for all unit types. New research by Harvard’s Joint Center for Housing Studies indicates that most renters spend more on housing than any other basic necessity. In fact, almost half of all renters are cost-burdened, meaning they spend more than 30 percent of their income on housing. When rent costs are high in your community, paying a monthly mortgage is often comparable to paying monthly rent. In some cases, it may even be cheaper!
Interest rates are historically low
The argument for buying a home instead of renting is bolstered by the current interest rates. In October, the average for a 30-year fixed-rate mortgage dropped to 2.80 percent, a historic low. Even a minor dip in the mortgage rate can make a noticeable difference to your monthly payment! Locking into a low mortgage rate now could save you a significant amount each month for years to come.
You may not even need a down payment
Saving up enough for a down payment can be one of the biggest obstacles to buying your own home, but you may not even need one! It may sound too good to be true, but there are loan programs and government assistance initiatives that can get qualified home buyers into a house with zero dollars down, including VA and USDA loans, as well as the Chenoa Fund.
Gain equity as the property value rises
Home values have risen even during the COVID-19 pandemic, and experts believe they will continue rising for quite some time. Fewer owners are selling, and new supply is being added to the market at a fairly slow pace. You may be wondering why this should matter to you, but increasing property values mean that the money you spend on your home will bear significant returns in the long run. With every monthly mortgage payment, you pay a portion of your loan down and increase your equity in the home.
Predictable monthly payments
Rent increases are common, and many tenants expect an increase every time their current lease is up. When it comes to how much a landlord can raise rent, pretty much anything goes. While there are rules in place that dictate how often a landlord can raise the rent, there are no rules about how much they can raise it. When you own your home and have a fixed-rate mortgage, you pay the same amount, month after month, year after year. This can give you real peace of mind, particularly if you have a strict monthly budget you try to stick to.
One of the biggest benefits of buying rather than renting is the tax deductions that come with owning your own home! If your mortgage is less than $750,000, you can deduct the interest you pay on the loan. You can also deduct your property taxes up to $10,000. These annual deductions often amount to significant savings for homeowners.
You can save if you decide to sell, too. If you’ve lived in your primary residence for at least two out of five years before you sell it, the home sale tax exclusion means you’re exempt from paying taxes on any profits you make for up to $500,000 if you’re married and up to $250,000 if you’re single. This could amount to impressive savings when tax time rolls around!
Have you been working remote this year due to COVID? Whether you’re running a side business out of your spare bedroom or working full-time from home, you’ll be able to deduct your home office expenses and the space that you’ve been using. The current tax law allows you to take a tax deduction of $5 per square foot for up to 300 square feet of office space, but this particular deduction can get complicated, so it’s worth speaking to a tax professional for more details.
Take advantage of the benefits of buying with Judy McLellan & The JudyMac Team of Crye-Leike Realtors
There are so many advantages to owning a home. You owe it to yourself to explore whether buying or renting is the best option for you and your family! Judy McLellan & The JudyMac Team of Crye-Leike Realtors is a great place to start. Our experts can walk you through the ins and outs of buying a home in Memphis, Germantown, Collierville, and the surrounding communities. To get started, give Judy a call today at 901-277-5839 to schedule your appointment!