When do you know its the right time to buy a home? What are the benefits? I pay less to rent whats the point?
Before getting into real estate I never fully understood how great it is to own your home rather then rent. I would even venture to say I never fully understood until I finally purchased a home. It was then I was able to experience it first hand rather then just talk about it with clients. Let me go into the 5 biggest reasons I feel its important to own your home rather than rent.
1. Hedge Against Inflation
Looking at rental trends over the years one thing is clear, there is a continued upward trend. San Diego has always had a shortage of housing which leads to a high demand for housing. This has created a very strong market for rentals which is the #1 culprit for this upward trend.
By purchasing a home you can hedge your bets against this happening . Locking into a 30 year fixed rate mortgage means that what you are paying today each month will not increase year over year. According to an article by the San Diego Union Tribune we saw a 5.1% increase in rents from the first quarter of 2016 to the first quarter of 2017.
2. Paying Rent Or Mortgage
You have to live somewhere so, would you rather pay someone else's mortgage or pay your own?
A lot of buyers try to "time the market" in an effort to getting a good deal. The problem is waiting could really hurt you. Although we have seen drastic declines in the market, 2007 was a great example. In the long run home prices have continually increased. Ask your parents how much they paid for their first home and then think about what that same house would cost today.
Your monthly mortgage payment may seem daunting now but over time, due to inflation, a $2,000 per month payment will quickly feel like $1,500. We look at our parents mortgage payment or even our grandparents and think, "wow, what I would give to have an $800 per month mortgage". Believe it or not that was once a lot of money!
3. Forced Savings
Unlike paying rent each month you pay your mortgage. Which means you are actually paying into the equity of your home. This can be accessed if you are ever in a bind and need extra money. I have had clients use it for medical bills, home improvement projects, to start their own business or buy a vacation home!
Living in such a wonderful place like San Diego we are fortunate to have a history of increasing home and land value. This is significantly due to the desirability of San Diego and the inability to easily add new housing to the market. As a home owner you get all the benefit of your homes value going up.
5. Tax Savings
If you are renting and make $60,000 per year and pay $24,000 per year in rent the IRS will still tax you on the full $60,000. As a home owner if you are paying $6,000 a year in property taxes the IRS will allow you to deduct that giving you a new taxable income of $54,000.
6. Your Future Is In Your Hands
As a home owner you make the decisions. You are not at the mercy of a landlord to decide when you move or what gets fixed. Many tenants will live with broken sinks or old carpet in fear that if they ask their landlord to fix it a rent increase will follow. With your home YOU make the decision of what gets fixed and when.
As a home owner you can also decide what color to paint your home, to add on to your house or change your yard, YOU can become the landlord if you want or need to and you decide if you want to have a dog or TEN! You could even have chickens in San Diego City limits!!
You don't need to live with the concern that one day your landlord may sell your home, decide to move back into it or increase your rent to the point that it is no longer affordable. I touched on it earlier, but as a home owner, you have a fixed mortgage. All these choices are yours and no one else's.
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