Najmi Muhammad on Whether It’s Better to Rent or Buy a Home
Many people are curious about whether renting or owning a home is a better deal. While there are many expenses associated with owning a home, the end result of owning is that you will have equity in the purchase. For most people, a home is their most valuable asset. Najmi Muhammad, a real estate and mortgage expert, lays out the 7 reasons why it is better to buy a home than to rent one.
1. Historically Low Interest Rates
In today’s housing market, there are historically low interest rates of about 4 percent. This means that the average homeowner’s money goes further than ever before. Borrowing on a home at only 4 percent is much better than today’s car loans and credit card rates. As of the summer of 2019, the Fed has cut rates for the first time since 2008, putting even more money back in the pocket of today’s homeowner.
2. Freedom to Live How You Want
When you are renting a home, you are generally bound by the landlord’s specifications for the property. The decor, appliances, and outdoor fixtures cannot be changed without the landlord’s approval. If you own a pet, you will have to worry about extra security deposits or breed restrictions. It can be very difficult to find a rental home that accepts dogs and cats.
Buying a home means that you can fully express yourself, with your own decoration choices both inside and outside. If you want a pool, put one in. If you want a fence around your property, build one. You are free to make your own choices and you will not have to fight with a landlord to make them happen.
3. Building Credit Ratings
While most people who are in the position to buy a house have already solidified their credit ratings, a history of making mortgage payments on time goes a long way toward cementing your credit rating. When your credit is fully established, you will have an easier time getting home equity, car, and personal loans.
4. Owning is Better for your Financial Health
A home can be an excellent investment if property values are on the rise. Even if property values dip in your area, a home is still a valid choice of investment. At the end of your mortgage term, you will own the home in your own right, and you will be able to live in it without a mortgage. When you rent, you will not be building toward your own financial future. Instead, you are only lining your landlord’s pockets.
5. Tax Benefits
Homeowners are able to deduct their property taxes and mortgage insurance on their tax returns. These savings can make the cost of owning a home lower than the cost of renting one. Tax benefits are also available for the first-time homebuyer, making the deal even more profitable, says Najmi Muhammad.
6. As Rent Rises, Mortgage Payments are Constant
Your landlord will probably raise your rent each year, but your mortgage will stay the same. Except in the case of adjustable-rate mortgages, you can count on your payments staying the same. You also have the option of refinancing your mortgage to take advantage of new, lower interest rates. This presents a major advantage of owning a home versus renting.
6. Homes Appreciate in Value
In most cases, a home will appreciate in value over the typical length of a mortgage term, 15 to 30 years. Home valuations rising will equal more money in your pocket for home improvements and home equity loans. At the end of the mortgage term, you could choose to sell and take your profit to a better home, or you could live mortgage-free at your current property.
7. Maintenance Costs Can Vary
Some renters hesitate to buy a home because they know that they will be responsible for repairs to the roof, siding, appliances, and other expensive items. They feel that they have a certain peace of mind when it comes to their landlord’s responsibilities. However, when you buy a home, you can subscribe to a home warranty. This goes above and beyond your homeowner’s insurance to cover home appliances and systems including heating, air conditioning, refrigerator, washing machine, and more. This affordable policy can help to offset some of the cost of purchasing a home versus renting.
Buying is a Smart Choice
Buying a home is the smartest choice for your financial future. With these 7 tips from Najmi Muhammad in mind, start looking into the mortgage process and discover what kind of house you could afford instead of paying rent. You will be able to express yourself in your home choices, and you will not be beholden to a landlord.