Renting Vs. Owning in California: 7 Reasons Why Buying a Home is Better
The renting vs. owning debate is something that keeps the financial world busy. One side is in favor of buying a home and enjoying the perks of homeownership while the other hand states that one must go for the cheaper option. But what if we look at states where renting isn’t easy! For this issue, our great state of California is a perfect example. Over the past years, the rent has gone so high that owning a home has become a more viable option.
Still, let’s dig deep and look at some reasons why it is good to own a home rather than renting one.
1. When Comparing Tax Benefits
The significant advantage you get is the mortgage interest deduction. These deductions apply to loans up to $750,000 in value. And guess what, people who signed mortgages before 2018, benefited from the threshold of $1 million. The tax deductions are lucrative for the initial years of a mortgage as the payments are feeding the interest portion rather than the principal. In short, you could save up on interest paid on $100,000. Similarly, you also enjoy property tax deductions and use the 1031 exchange to increase your portfolio’s value.
2. Looking at Building Equity in the Long Run
So, this section is about building equity. You don’t have your share in the property when you rent it. On the other hand, if you look to buy a home, you start building equity instead of burning through cash. You’ll not only be providing a roof to your family but also building wealth in the form of an asset. That’s something renters can’t do.
Wait! There’s more to it. If you maintain the ownership of your home until you are a senior, you can get a reverse mortgage and use it as an income source. Make sure to do your research before asking for a reverse mortgage. It has its pros and cons.
3. Stability Wise
In all honesty, renting has nothing to do with stability. You are always at your landlord’s mercy. If they decide to make changes, you might suffer. If they choose to kick you out, you’ll suffer. They even force their renter to pay on time so that they can keep up with their mortgage. So, technically, you are helping them pay their mortgage. People who are settling down need to have space to themselves where they are the captain of the ship.
Moreover, people who own a home have an asset to their name. This makes them look well in front of lending authorities and allows them an option to explore more properties to invest in. And, each the price of a property appreciates. Hence place yourself at a substantial financial advantage by owning a home. Overall, stability has everything to do with owning and almost nothing to do with renting!
4. Increase your net worth
Property appreciates over time; if you do proper research while buying and do it with your eyes wide open, you can achieve a steeper increase in the value of the house in a shorter period. And that is each year that you own it. This can never happen if you are renting a home; the only thing increasing every year is the rent that you are paying. Renting a house does nothing to improve your net worth, and you are actually in a worse position every month from where you started.
Many economists estimate that houses can appreciate from 3%-15% each year and sometimes even more. But it is also true that value does not appreciate all the time. So if you invest wisely, owning a house can give you a return on that investment in a few years.
5. Creating your Dream House
Living as a renter is living in someone else’s house where you have to obey their rules. These rules might not align with your way of decorating the home to make it your own. When you buy your own home, you have complete control over the redecorating and remodeling of the whole house, and you don’t have to subject to someone else’s petty rules and decorating whims.
Having a dream house and a personalized space is almost everybody’s desire, and owning a home in California is the only way you can ultimately fulfill this dream.
6. Fixed mortgage rates
If you are renting, there is a risk of rising rent every year, unless you live in a rent-controlled building or neighborhood, this can cause severe instability in the budget. And under California law, there is currently no maximum limit for rent increases, so it is totally under the landlord’s control. On the other hand, if you get a fixed-rate mortgage, your mortgage payment never changes. You can work out the details of your mortgage before you take to sign the loan. An increase in the mortgage rate is quite low, and it won’t deviate too far from your first mortgage payment.
However, whatever the case may be, whether fixed or adjustable rate, both of these mortgage rates provide stability to the owner. And they will not change without the consent of the owner so you will be in charge of the change.
7. Chance to lowering your living expense someday
For many, the prospect of living rent or mortgage free sometime is very alluring. And as long as you are renting, this can never happen. There will be a day, however far away it may seem when you will be able to pay all of the mortgages off your house. Not having mortgage payments is one of the best things that you can do for your future.
Having a mortgage-free home for your old self will give you peace of mind. Then with the lowered expense, you can save for your other projects, other than rent or mortgage, and genuinely enjoy the perk of owning a home.
For Those Who Wonder!
If you are stuck at making this choice because of your financial condition, i.e., bad credit, don’t worry, we can help you fix the issues. These days, it’s all about the buyer. Meaning the buyer has their say in a transaction. So, if you choose to own a home, you have a clear advantage over the sellers. At Dream Home Finder, we assist several aspiring home buyers in finding their dream home. A place where they can grow old, start a family, and create memories that last the test of time.
All Your Information is Protected When You Sign Up