FINANCE

“It is critical that kids start to learn the value of money, short-term and long-term saving and budgeting at an early age.”

Should I rent or buy? Many Americans debate this question, and with good reason. You need a place to live and the only two options are buying or renting. However, given the price of homes in some areas of the country, renting may appear to be the most affordable choice. But with that choice comes less space overall, less control over that limited space, and no creation of equity.

At first thought, you may not know what to do, but there are plenty of valid reasons for owning a home instead of renting. Below are several perspectives about why owning is the better choice.

Affordability

Some potential homebuyers may be concerned about rising interest rates, considering that they can negatively impact the current or future affordability of a home. Although interest rates are higher, they have been raised minimally and were starting from historic lows, meaning that interest rates are still quite affordable.

What’s more, if you wanted to rent a comparable house, you would spend a lot more monthly to cover the landlord’s housing payment, their taxes, plus their potential profit.

According to a report from home and real estate website Zillow.com, American renters paid $441 billion collectively in rent in 2014, which is a surge of 4.9 percent from 2013. That is approximately $26 more per month for the average renter. In less affordable rental markets the increase was even greater, partially due to high demand for rental homes or apartments and also a lack of available supply.

Increased Financial Stability

Financially speaking, buying a home can be a complicated endeavor. First, to get the best terms on a mortgage you need to ensure your credit score and report are thriving, have a stable income, be current on all your bills, and even have saved a sizable down payment. What do you get when you consolidate all of those actions? Healthy finances in all aspects of your life. While renting does not exclude you from these positive actions, many people attempt to improve their finances well before starting the home buying process. Therefore, buying a home can have an indirect yet positive effect on the way you handle your money, which will help you both now and in the future.

Generating Equity

As evidenced by the Zillow study referenced earlier, rents have continued their steady increase in costs. There is another negative financial factor to renting: the lack of equity. Over the years, your mortgage payments will slowly yet steadily peck at the amount you owe on your loan. Eventually, you start to own more of your home, which is known as equity. You can use this equity merely when calculating your net worth, but should you need it, you could access some of it to fund renovations, help pay for college tuition, or just relax on a much-needed vacation.

Make It Your Own

What color will you paint your bedroom walls? Maybe you will install a hot tub, get a pet, or create an edible front yard? One thing is certain when you own your home: You do not need to obtain permission from a landlord to make nonstructural updates to your property. You can change the inside and outside as you see fit and that is a massive advantage over renting.

Living Memories

Many people buy their home with the idea of staying for the long term, raising a family, and enjoying the different phases of life. This offers a sense of stability, commitment, community, and family, and you can mark these feelings through the physical changes you make in your home. In essence, your home is not just a place to live, but a constant that you can gradually transform into living memories to cherish and celebrate.

Be Prepared

Buying a home is a large financial commitment that is also a huge emotional impact. Before jumping in, prepare a realistic budget so you know what you can afford comfortably. Don’t push yourself to the limit either. Maintain a buffer to address the unexpected. Make your home a place where you enjoy both personal and financial comfort, and that can be done through buying.