Homeownership still represents the American dream, but many people wonder if they will ever be able to reach this goal. That fear is largely unfounded when you break down the numbers and examine the real cost of renting vs. buying and also renting vs. owning. We tapped The Motley Fool for an inside look at “Why It’s Better to Own a Home Than to Rent,” with some input of our own.
1. The tax benefits
“When you own a home, you get to enjoy a number of nifty tax benefits that can shave thousands off your IRS bill, depending on your personal costs,” they said. “One major tax break you’ll get is the mortgage interest deduction, which currently applies in full to home loans up to $750,000. The interest deduction can be especially lucrative in the early years of a mortgage, when the bulk of your payments are going toward the interest portion of your loan, as opposed to its principal.
“In addition, you can deduct your property taxes on your return up to a certain point. The property tax deduction, which falls under the state and local tax (SALT) deduction, used to be unlimited. For at least the next seven years, it’s capped at $10,000.”
As a renter, you’re not entitled to these tax breaks; your landlord is.
2. You’ll build equity rather than burn through cash
“When you rent a home, you pay a certain amount of money each month for the privilege of living there, which makes that payment a pure expense. When you own a home, however, it’s more of a hybrid expense/investment, because while you are spending that money out of a need to have a roof over your head, you’re also building equity in that property over time. This means that if property values rise in your neighborhood and you choose to sell your home, you stand to make money from it. That’s not something renters can do.”
According to CoreLogic’s most recent Homeowner Equity Report, “The average homeowner gained approximately $12,400 in equity during the past year. California had the highest year-over-year average increase at $36,500.” And that’s only in a three-month period!
3. You’ll get more stability
“When you rent a home, there’s nothing to stop your landlord from booting you once your lease expires. But when you own property, it’s yours to live in until you decide to sell it. The only way to effectively be forced to leave a home you own is to stop making payments on your mortgage and get foreclosed on. Barring that, you’re good to stay put. This is an especially important consideration if you have children and want them to remain in a specific school district. Sometimes, moving a mere half-mile away could shift you into a new district, which means forcing your kids into a new school system.”
4. Your money is your own
Building on the third point…When you’re renting, you’re at your landlord’s whim. That means that, not only are you paying their mortgage and building their wealth, but they can continue to raise your rent every year. Rents in Greater Los Angeles rose four percent in 2018. If you’re already paying around $2,500 a month, which is below the average rent for a three-bedroom place in many San Fernando Valley cities, according to CoreLogic, that’s a $100 per month blow to your budget, for money you’re just throwing away.
As a homeowner with a 30-year mortgage, your payments remain stable, which takes away the anxiety of the unknown and also allows you to better plan for the future.
For more information, visit Monroe. Monroe is an exciting new community of single-family homes in the San Fernando Valley that’s making homeownership possible with prices from just the mid $600s. Just 24 of these spacious new homes with three bedrooms and four baths in 1,961 to 2,025 square feet are being built, so buyers are urged to make an appointment to tour the community right away.
Monroe, from acclaimed builder etco HOMES, offers open-concept designs with spacious gathering areas that flow easily from one space to the other. Gourmet kitchens are chef-ready, with quartz countertops, large eating bars, Whirlpool® stainless steel appliances, and frameless, flat-panel European-style cabinetry with brushed nickel hardware. Each of these ideal residences also offers spacious bedrooms with luxe master suites and a convenient main-floor bedroom and bath that’s perfect for guests. An abundance of smart home features are also included, including Ring® Video Doorbell and Kwikset “Kevo” Keyless Entry, and all of the homes feature at least one private outdoor space and a two-car attached garage.
Monroe’s convenient San Fernando Valley address puts it within easy reach of the 405, 101, 135, and 5 freeways, and just minutes from the Van Nuys Metrolink Orange Line. Spend evenings exploring the vibrant dining landscape with numerous coffee houses, hip eateries, and some of the best ethnic food in Southern California. Weekends crave shopping trips to the Northridge Fashion Center, Westfield Sherman Oaks, and Westfield Topanga & the Village. Also nearby are great schools, recreational opportunities including Lake Balboa/Anthony C. Beilenson Park, and major employers that make commuting easy, including movie studios, aerospace companies, and healthcare. Valley Presbyterian Hospital is just two miles away!
Don’t miss your chance to purchase one of these wonderful homes and put an end to rent for good! Email firstname.lastname@example.org to make an appointment or for more information.