Renting Vs. Buying a Home: Top 5 Benefits of Owning

The 5 Primary Benefits of Owning Vs. Renting a Home

1. Accruing equity

A conversation about buying vs. renting a home must touch upon equity. Few people have the opportunity to buy a home outright, hence the necessity of a mortgage. As you pay off your mortgage, you start to build equity—that is, a portion of the home that you own.

When you sell your home, you can pocket the equity you have built over time. Equity also enables you to take out a home equity loan, which can help you finance major expenses, such as college costs or home remodeling.

You can’t build home equity as a renter. If your rent is $2,000 per month, that is money you will never see again. According to the NLIHC, there are over 44 million renter households in the U.S., and this number increased by more than 100,000 in 2023, reversing a previous decline between 2021 and 2022.

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2. Reduced living costs over time

Mortgage payments tend to be less than monthly rent payments, but there are more costs associated with homeownership. If you own a home, additional costs to consider are property taxes, utilities, homeowner’s insurance, and a variety of maintenance costs. Renters may pay for some utilities and optional (but recommended) renter’s insurance, but the average monthly cost of owning a home often exceeds that of renting one.

That said, homeowners eventually pay off their mortgages. When that time comes, monthly expenses are drastically reduced. This means an older homeowner can enjoy lower living expenses relative to someone continuing to rent a home.

3. Tax advantages

Homeownership provides several tax benefits that renters do not qualify for. Perhaps the most notable tax benefit is the mortgage interest deduction, which allows homeowners to deduct from their taxable income the amount they paid in interest on their mortgage. Homeowners may also deduct what they have paid toward property taxes and homeowner’s insurance premiums.

There are many other benefits that sometimes vary by state. Some states, for example, offer tax credits for homeowners who update their homes to be more energy efficient.

4. Ownership of an appreciating investment

Home values reliably trend up over time. There can be periods in which these assets depreciate, and the rate of appreciation varies by location, but a well-maintained home is a safe, stable investment that enables the expansion of a homeowner’s personal wealth. A homeowner can realize these gains when selling the home.

Renters, of course, do not benefit from the appreciation of the property on which they live. In fact, renters lose money over time as the cost of rent inches up year after year.

5. Freedom and stability

The financial benefits of homeownership are numerous, but there is something to be said for the autonomy that homeowners can enjoy. If you own your home, you can update it however and whenever you like. You have the final say when it comes to landscaping, painting, appliances, and so on. Renters, on the other hand, are restricted to what their landlords will permit.

Owning a home also offers more stability than renting. There is not the worry of a landlord declining to renew a lease. The reality of renting is that sometimes renters have to scramble to find a new place to live.

Finally, building equity and owning an appreciating investment provide financial stability, too. If you’re debating if buying or renting a home is right for you, consider that you can enjoy a more stable, unrestricted lifestyle when owning a home.

Buying Home Warranty: Before Closing or After?

Among the downsides of homeownership are the costs associated with maintaining the home and repairing appliances and systems that break down over time. Homeowners must be prepared for surprise expenses. An aging refrigerator or washing machine could malfunction at any moment.

Fortunately, home warranty coverage can offset those costs and ensure that appliances and systems are affordably repaired when something goes wrong. Homeowners who are actively trying to sell their home and want to incentivize buyers can purchase a seller’s home warranty before closing on a sale. This warranty can be later transferred to the buyers. If the seller or realtor does not offer a warranty, buyers can purchase coverage after the sale.

To learn more about Liberty Home Guard’s warranty plans, call (866)-916-1576.