The two biggest appeals to owning a house are pride of ownership and freedom. Before the housing crisis, homes on average appreciated at least 5% per year. The historical gains have leveled off but within a few years the old rules of earning a few percent over the current rate of inflation on real property should apply once again. This potential real estate bottom makes it a great time to get the most house for the least money!
The government allows mortgage interest (on your first and second homes only) and property taxes (on any number of homes) to be deducted from your gross income, which reduces your taxable income.
If you rent a home, the landlords want to increase the amount of rent every year. When you have a conventional mortgage with a fixed interest rate your payment is the same every month for the life of the loan. Just imagine what your rent costs might be in 20 or 30 years!
Making monthly payments toward your house is similar to putting money in a savings account for retirement. Unless you have an interest-only mortgage, a growing portion of your monthly payment goes toward the principal (reducing the loan balance) and when you sell the home, you typically get that money back in the form of equity (value of home minus mortgage balance). In addition, the property value appreciation is like getting a good rate of return on investment savings accounts.
When you rent a home, you are usually prohibited from making any changes to the home (some landlords do not even allow you to paint the walls or hang anything on them). If you like to garden, you can’t plant your favorite perennials. When you own a home, it is your own blank canvas to make it exactly what you want. Painting, window treatments, carpet installation, tiling, etc. all contribute to making your house a home and in most cases, also increase the value of your property.
In addition, with today’s real estate market, a lot of homeowners who rent their houses end up in foreclosure, which means you have to move out fairly quickly (within 90 days). Why worry if your landlord can make his own monthly mortgage payments?
