Sea Side Scrap Book » Why owning a home is better than renting.

Why owning a home is better than renting.

Before the economic collapse a few years ago everyone was clamoring to buy houses. Why wouldn’t they if housing prices ALWAYS rise? It is very important to take a broad look at the news that is written over the coarse of a week or so. Doing so gives a great picture as to the general market conditions and what is going on.

When a market bubble is forming you will see more articles boasting of the success and ease at which so many people are making a fortune in a given area. With the real estate bubble the best example could be several television shows on flipping houses.

This is largely because if everyone knows something, there is no more money to be funneled into the system and the enormous game of musical chairs comes to an end. If everyone knows about something, and even novices to the subject are making a killing then there is no more potential for growth and the music stops.

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The bubble will burst as they all do and on the way down take another look at those headlines. They will all likely project tremendous fear. You will know the bottom is likely near when the fear subsides slightly and only a feeling of remorse or despair remains.

Currently, the market is past the fear phase and is more in a period where the despair is slowly subsiding. When everyone is fearful or still has a bitter taste of the previous bubble crash is a period when there is a lot of potential for growth, even though it may take awhile to get started. Right now many people want to own their own home, but with the current employment rates they just don’t have the money.

In my opinion the choice should be obvious when you compare renting to buying. When you rent, you pay money every month to someone but you don’t have to worry about maintenance. They take some of the money to cover expenses, some of it to pay off debt and the remainder is either a profit or a loss. This is not including the effect a change in market price will have on equity.

When you own your home you will likely end up spending more money every month to start. After few years or so your monthly expense as a home owner will likely be less than the monthly expense of those renting a place with a similar amount of space.

After time, the equity that you have built up in your house will give you financial agility, should you ever need it. Had you been renting, the increase in rent every time you renew your lease will have made you less financially agile.

You will be rewarded if you own your home and take care of it. Over time, owning your home will become relatively cheaper because you just pay roughly the same amount each month with little increase.

This all means that in 20 years time you will be paying significantly less a month than someone renting AND you will have built up equity in your home. Even better, if you were able to fully pay off your home loan, you will pay only property taxes.

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