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A bigger percentage of people around the globe dream of owning a home at some point in their lives. It does not matter whether it is a person looking for financial independence or a small family that wants to buy their first home – buying a home is one of the best investments anyone can ever make.
However, buying a home is not something you can just think of and make the right decisions. It needs a lot of preparation and planning. Sometimes, it is even better to stay in a rental home while preparing to purchase a house.
That notwithstanding, some people decide to stay in a rental home or buy one for financial independence. If you are one of them, how do you know if you are making the right or wrong decision?
Financial Independence: Buying or Renting?
Buying
Even though buying a home is one of the best investments you can ever make, you need to first think about it thoroughly beforehand. Most cities are experiencing high demand, prices, and limited supply, meaning that you need to consider every aspect when buying.
Fortunately, if you’re buying, you can look into first-time home buyer programs in your state, e.g Washington offers first-time home buyers programs and grants that can help them achieve home ownership. This means that you do not have to struggle with the financial burden alone
What are some of the reasons that make buying a home better for those seeking financial independence?
Tax benefits
Even though some people view buying a home as one of the most if not the most expensive purchases they can ever make in their lives, it also comes with some financial perks such as tax deductions. For instance, you will get tax deductions in refinancing points, property taxes, and home mortgage interest.
Home appreciation
If you purchase a home for yourself or even your family, you will be the property’s sole owner. Over time, your property is going to appreciate giving you one of the best opportunities for long-term wealth. You, however, need to be careful especially with the location of your home as well as its maintenance.
Stagnant mortgage costs
When getting a mortgage to help with the financial burden of purchasing a home, you need to be careful with the type of mortgage you get. Those who get a fixed-rate mortgage will always pay the same amount of money until they complete the payments. Renting a home is different since the owner decides how much money they want to charge as rental fees.
Renting
Some people might find renting as their way of achieving financial independence. Just like buying a home, renting also comes with a few financial perks. Even though buying a home comes with long-term benefits, renting can also provide you with some financial stability.
Here are some of the reasons some people rent a home instead of buying one to achieve financial independence;
Less responsibility
Even though you might need repairs and maintenance in a rental home, you do not have to take care of them. The property owner is supposed to take care of these things for you.
All you need to do is to contact your caretaker or landlord and notify them about any repairs that your rental home needs. Purchasing a home means that you have to take care of these things on your own.
Easy monthly payment
Buying a home means that you have to worry about things like taxes, repairs, maintenance, utility bills, and of course your mortgage payment. On the other hand, renting a home gives you the financial freedom of worrying about the rental payment.
Depending on the location of your rental house, you might be paying very little compared to a person paying a mortgage.
Free amenities
Some rental properties come with a lot of amenities for “free”. Well, the service charge might be included in your rental payment. That notwithstanding, you might end up enjoying extra storage space, free parking, a swimming pool, and fitness centers, among others. If you decide to buy a home, you might have to add these amenities at your own cost.
Which is Better?
Buying a home is a huge investment for any person. It also comes with a lot of benefits compared to renting. However, renting can also be a better option for some people, depending on things like location and their monthly income.
Fortunately, you can rent now while saving to purchase a home in the future.
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