Apparently, there is an old saying that “rent money is dead money”. Think about it for a few minutes, if you were to buy a house and get a mortgage, eventually, that mortgage would end. However, if you simply continue to rent and rent and rent some more… after that same amount of time, you don’t own anything except whatever personal items you put into your apartment. And once that mortgage is finished, you are home free for your golden years. Houses are smart, long-term investments. Here are five great reasons to go out get that house, the likes of which you have only before dreamed.

Future Returns

Over time, the price of houses will rise. It’s simply a fact of life like lemons are yellow, the grass is green, and Cher will probably have at least one more farewell concert tour. Sure, sometimes housing prices will drop, but if you buy when prices are low and put some work into your new home when the time comes you could sell it off and make quite a pretty penny.

You are the boss

Buying a house gives you the added comfort of owning and not being dependent on a landlord or the landlord’s rules. I have a 65 lb dog; there are not too many apartments that are keen on pets in general, but especially dogs. If you have a dog over 55 lbs (that’s the largest acceptable size I’ve seen in apartment hunting), chances are an apartment won’t want anything to do with you. With a house, however, I can happily keep my fantastic beast. And there is the added bonus that we have a massive yard out back in which he can run around and terrorize bunnies and birds to his heart’s content.

Personal Space

Another benefit of buying a house instead of renting is space! To go along with rambling about my enormous backyard, in general, you just have so much more elbow room when you have your own house. Not only does your average house have a greater square footage, more bathrooms, and typically a larger kitchen, but you don’t have to worry so much about neighbors. After spending six years living in apartments all throughout various college cities, I can say I definitely love not living above, below, or beside anyone anymore. It’s not really the most enjoyable thing when you’re trying to focus on a project and the people living above you decide they need to choose that exact moment to throw a party.

Celebrate

Speaking of parties… if you own your own home, you won’t have to worry about neighbors grumbling so much about those parties! You can celebrate with wild abandon! Well, semi-wild abandon, because there are usually sound ordinance laws to consider. However, have you ever lived in a gated apartment community and invited people over for a nice get-together? It’s a pain to go through security and get everyone scanned through and signed in. When you own your own home, unless you’re an A-List celebrity living large in Los Angeles, you likely won’t have to worry about a security gate for wanted (or unwanted) guests. Or maybe you’re in the mob, and it’s standard procedure not matter your location.

Leverage

Net worth. One great benefit of buying a house is a little something known as leverage. What is this mysterious feature? Well, leverage, simply put, is: “use borrowed capital for (an investment), expecting the profits made to be greater than the interest payable.” So essentially, it is similar to the first point made in this list. When you get a house, you borrow some money to purchase that house. Over time, the price of your house will (hopefully) increase, and some day you will have a piece of reality that will be worth far more than what you paid for it.

If that’s as clear as mud to you, another way of saying leverage would be: “the use of various financial instruments or borrowed capital to increase the potential return of an investment.”

The person doing the buying, you, is using only a portion of the overall cost of the item, or house to make the purchase. The difference is made up by a bank. Now let’s say you want a really expensive house, ten bedrooms, an inground swimming pool, in-home theater, the whole nine yards. You have done your research and the crunched lots of numbers and realized that this is possible but you can’t quite come up with the full amount right away. So you go to the bank and ask for some help. You will have to make the downpayment, probably one fifth of the property’s value, and the bank will make up the difference. Over time, your property will gain in value, and you yourself will increase dramatically in net worth. (Net worth: amount by which assets exceed liabilities. This shows you are financially healthy and banks will loan you money for fun things.)

Now let’s say you take that original one-fifth of your first house and instead, buy a house worth only that much. You had to give up the theater and a few bedrooms and maybe just have an aboveground pool, but it’s much easier to manage than worrying over that palatial nest you were after before. However, over time, the house, being cheaper and worth less than our first super house to begin with, will not gain in value quite as much. Therefore, you will not gain in value. Your net worth will not increase as dramatically. (So no loan to get that jet ski you’ve always wanted.)

So go forth, get some freedom and boost your value, and maybe host a few quiet celebrations with close friends. While you’re at it, rescue a few dogs from a shelter to share in the joy of your new home. Your new home which you own, and when you retire, will be yours, worry-and-rent free.

5 More Reasons Buying Beats Renting (Updated)

Are you thinking about the pros and cons of renting verses buying a home? There are many things to consider. But overall, buying a home will always be your best bet. In the long run, it will benefit you so much more than renting an apartment or a townhouse. Here’s a look at some reasons why.

Tax benefits

You can deduct mortgage interest as well as your property taxes. Renters don’t get this bonus. Plus, if you meet certain requirements, the IRS won’t apply “capital gains” tax on your profits from the sale of your home. You are allowed to keep the first $250,000 in profit you make when selling the home if you’re single. If you’re married, then you get to keep the first $500,000. In addition, if you work from home you might be eligible to take deductions for home office and other utility uses.

These kinds of financial gains are just not available if you’re renting a living space. You basically don’t get any financial bonuses at all if you’re renting, which is a total letdown.

Overall, buying a home will give you more financial stability and will provide you with more money in the long term.

Equity

When you pay rent, you are basically paying your landlord’s mortgage. This means that you’re adding equity to his or her bank account…this doesn’t benefit you in any way. However, when you have your own home mortgage, you increase your degree of ownership in your home with every single payment.

The general rule is that if you intend to stay in your property for at least five years, then the costs of purchasing the home will be offset by accrued equity and increased housing value. If the equity in the home grows to more than a 20-to-80 percent loan-to-value ratio, then you will be able to borrow more against your own equity in the home. If you need capital for major purposes, then this can be cautiously used. If interest rates drop then you can refinance your mortgage or even borrow against the equity in your home to fund something major. You could fund something such as a second home or your child’s education.

Maintenance choices and creativity

If you live in a house than that means everything is up to you. You can decide how to approach maintenance, either by doing it yourself or by hiring someone to do it for you. If you are renting space somewhere then you have to pay an extra monthly fee to have maintenance work covered by the association’s contractors. You also have no say in how anything on the outside or the inside of your place looks. In your own home, you decide on literally everything–the paint colors, the decor, what hangs on the walls. You have so much space for creativity, whereas in a rented space, you don’t.

Lots of times in rented spaces, you can’t control things like lighting fixtures and even things like appliances. But, in your own home, that’s all up to you as well. You’ll have so much fun being creative and decorating your own place.

Being part of a community

Once you commit to buying a home, you are more likely to settle down in a community because you know you’ll be there for years. You can get the chance to really know your neighbors and join some community activities. Maybe you can even join a homeowners association!

Being part of a community is really important especially if you have a family. Your children will want to be involved in community activities and they will want the stability of having a home. That way, they won’t have to worry about things like changing schools and having to make new friends over and over again. A home provides safety and assurance for not only you, but your whole family as well.

The overall investment

Investing in a home is something that you will benefit from for years to come. By buying a home, you are investing in somewhere to live and also in yourself. You can decorate the home as you please and invest in things for the outdoors like plants, fences, and maybe even a pool. Ultimately, you are investing in your own happiness and your overall well being.

For years to come, your home will gain value and the changes you make to it will boost its value on the market. Additions that you make to your home will personalize your space and make it special. In an apartment or a townhouse, you can’t have this kind of freedom. It’s great to be able to stand back and look at your home and know that it’s yours. In the long term, buying a home will only make you happier and benefit your life.

Article Keywords

  • ,

Are you ready to buy your first home?

Your first home purchase can be a great experience if you work with the right lender. With 75 years of mortgage lending experience, exceptional customer service and some of the most competitive rates in the industry, you can trust the Tim Bullock Team to help guide you through the entire process.

Learn More About Us

Union Home Mortgage – Tim Bullock Team