Homeownership is a major life decision. You are signing contracts and loan documents that lock you into payments for as long as 30 years. You can no longer depend on a landlord to handle your scheduled maintenance. In other words, you are taking on a lot of responsibility.
Despite this increased responsibility, the positive aspects of homeownership greatly outweigh the negatives. Homeownership is part of the American dream. You have more control and will most likely create a better life for you and your family.
Here are nine reasons why being a homeowner is better than being a renter.
There has never been a better time to buy a home. Interest rates are at historically record lows. With these low interest rates, your monthly payments are lower, and a huge portion of your payment each month goes towards the principal.
Right now, the interest rate on a 30-year, fixed-rate mortgage is below 3 percent. That’s unheard of for a home loan. That means you can buy more home for the same amount of money. You will never be able to get a loan at these rates so it makes sense to lock in an interest rate and buy a home now.
Rent has increased significantly in recent years, especially after the 2008 real estate crash. According to government data, rent increased 222 percent between 1984 and 2020. During that time, rent increased an average of 3.5 percent a year and even more drastically in coastal cities like Los Angeles and Washington, D.C.
On the other hand, according to real estate website Trulia, homeownership is 38 percent cheaper on average than renting. A mortgage payment is stable and will not change over the life of the loan, unlike rent where the landlord increases rent every year at the end of a lease. You will not see that annual increase in rent with a fixed-rate mortgage, making homeownership less expensive.
With rent, you are literally throwing your money away. Each month, you are giving money to your landlord and you get nothing in return. The landlord gets all the benefits. He or she can use the money as income or to make the payment on the mortgage. When you own a home, you are building wealth each month. A large portion of the payment goes toward the principal on the loan, and over time, the value of the house appreciates. So, you are building wealth and increasing your net worth with homeownership.
As a renter, you must ask permission to hang light fixtures or paint a room with a particular color. That is not the case when you own your home. You can design and renovate a home however you like when you are the owner. You can give the home a look and feel that reflects your own personal style and taste. You can add new cabinets in the kitchen or put hardwood floors in the living room. You can add anything you want when you own the home.
Owning a pet challenging when you rent. While more rentals are pet-friendly these days, many landlords are hesitant to allow pets, especially large dogs. That can make it hard to find a quality place to live when you own a pet.
And these days more and more people own pets. According to a recent study, 54 percent of households in the United States own at least one pet, and the number of households with a pet has increased 36 percent since 2009. When owning a home, you do not have to get the landlord’s permission to have a pet.
Renters are less stable and move often. You might rent a place for a year or two and move to a different rental. That is not the case with homeownership. You are likely to stay at a place for a long period of time.
A recent study by the National Association of Realtors found that 4.7 percent of homeowners moved between 2010 and 2011. That compared to 26 percent of renters. The study cited many reasons for moving, but the largest reasons were work — lost or changed job — and a desire to live in a better neighborhood.
Another positive aspect of stability is the benefit to children. Moving can be hard on a child. They have to switch schools and make new friends. A child with a stable home environment is more likely to thrive in school. A study in the Real Estate Economics journal discovered that children of homeowners performed 9 percent better in math and 7 percent higher in reading.
You are more likely to become involved in your community as a homeowner. Homeowners have a better chance of getting to know their neighbors and serving on community boards. Homeowners have a more vested interest in the success of a community and are willing to invest more time and energy into making it better.
As a homeowner, you can use the equity in your home as capital. If you need extra cash for home repairs, or money for another reason, a second mortgage on your home is an option. You can’t do that as a renter. According to a survey in 2013, more than 7 million Americans had taken out a second mortgage or a home equity loan.