3 Reasons to Buy a Home instead of Rent

Many people have the financial goal to buy a home in their lifetime in order to capitalize on both financial and personal benefits. Unfortunately, the expense of home ownership can cause some people to think twice about whether it is the right option or if continuing to rent makes more sense. While renting makes sense in a handful of financial situations, most borrowers will benefit from taking a mortgage loan and buying a home in instead of renting. 

#1 Pay Yourself First

When you pay rent, you are giving a significant portion of your earnings to a landlord each month. A mortgage payment will still mean you are paying a lender, but you are in effect paying yourself. When you make a mortgage payment, you contribute to the equity you have in your home. This equity is the basis for your net worth. Further, when you determine it is time to sell the home in the future, this equity will result in cash in your pocket for your next home purchase or other needs. Instead of handing over the money to a landlord with nothing to show for all of your payments, pay yourself first through a mortgage payment.

#2 Provide for Long Term Stability

Building an asset base is the key to providing for long term financial stability. You will use your asset base to take future loans, provide your beneficiaries with value after you pass away and cover many other fiscal needs in your lifetime. The vast majority of people will never own an asset that is of greater value than their home. Depriving yourself of this asset means you will have to compensate in other areas or you will end up having a low net worth. A low net worth will cause you to live your life in debt. Not only is debt expensive, it is also very stressful. Aiming to get out of debt and own the largest asset base possible provides for your wealth later in life. When it comes time for you to retire, you will be much more able to lead a healthy life if you are no longer making rent payments or mortgage payments and simply own your home outright.

#3 Make Home Modifications

It makes financial sense for most people to own a home. Aside from these fiscal reasons, though, there are personal reasons that lead many to choose home ownership over renting. When you rent, you are only taking care of a home for another person, your landlord. Any time a part of your apartment or home needs repaired, you need to contact that person in order to schedule the repair. When it comes to modifications, you are likely limited in the extent of your options. For example, some landlords will permit you to paint a wall or change out a light fixture. Very few, however, will allow you to make the home your own through customization and modification. If you do make improvements, any financial gain from those improvements will go to your landlord. Most prefer to be able to customize, enjoy and profit from ownership of their own property.