Differences between Renting and Owning A Home

Lifelong renters have what I call a renters mentality when it comes to owning a home. They try to equate the characteristics of renting with owning a home. The question I get the most is how much is my security deposit going to be? When owning a home, there is no security deposit. You are obligated to take care of all the necessary repairs and to keep insurance on the home. Lenders include this as a stipulation before providing you with a mortgage.

One of the differences between renting an owning is in your payment. When you own your home, other than slight increases in home owner's insurance and property taxes, your payment can stay pretty level for the life of the loan. When you rent, you should count on your payment going up every one to two years.

Owning a home is the first real step in wealth building for most families. But, aside from the obvious financial benefits, homeownership shows your pride in, and commitment to your community. That level of pride and commitment is usually not found among the more transient community of renters.

Over time, people who own homes accumulate more wealth than people who do not own homes. If you rent today, you may have lower housing expenses than if you bought today. But think about where you will be financially in the long term.

Owning a home is generally more expensive. Besides just the cost of purchasing a home there is the issue of time. Homeowners generally have a longer level of commitment to the property then a renter. Because of this they tend to take care of the property better and fix things that a renter might not.

While the possibility of having to pay for any repairs around the house, and having to mow the lawn, shovel snow, etc can seem like a disadvantage to owning a home, there are many reasons to buy anyway. Of course the reasons are different for everyone, but the most common reasons tend to be very similar.

One of the benefits of owning your own home is the tax benefits. The interest you pay each month on your loan balance is deductible, as are most of the closing costs of a loan. Consult with your accountant for more details.

Another difference between renting and owning your own home is the ability to build equity. When you rent, you are building equity in a property owned by someone else. When you own your own home, you are building equity that you can tap into at a later date. When you own it, your home becomes an asset, not just a roof over your head.