Plano rentIf you’re at the stage in life where home ownership is nearly within your reach, you’re probably wondering whether you should start looking for a Plano home or whether you should just keep renting. Renting is easier and less hassle – people say, and it gives you more mobility. But…over the long term, all that rent money can really add up – and it eventually reaches a point where buying a home is a better deal.

So why is paying a high rent a worse option than buying a house and getting a mortgage? Here’s what you need to know.

Renting Doesn’t Generate Equity

One of the single biggest sources of wealth in the United States is home equity – as you pay down your mortgage, you invest more and more of your Plano Rental Homemoney into your property, and it appreciates in value. When you eventually sell that home, you make a profit. The monthly payment is something you’d have to make anyway, whether you rent or own – but when you rent, your monthly rent money lines someone else’s pockets, while when you own, paying down your mortgage actually creates wealth for you.  In the DFW area, residential real estate has appreciated between 8% and 15% per year.  Take a look at this recent Dallas Morning News graphic.

Renting Doesn’t Give You Access To Homeowner Tax Credits And Deductions

There are all sorts of tax benefits available to homeowners that renters simply can’t access. As a homeowner, you can deduct your mortgage interest from your taxes owing, reducing your taxable income – but there’s no such deduction for renters. You can also deduct property taxes and some closing costs when you buy a home – there are no corresponding tax benefits for renters.

There are also several tax credits available to homeowners that aren’t available to renters. Things like renovations or simply buying a home for the first time can give you tax benefits that renters can’t access.

If You Can Muster Up A Down Payment, Owning Is Cheaper In The Long Run

One of the biggest hurdles keeping young people out of the real estate market is the down payment. It’s not easy, but if you can save up enough money for a down payment, you’re actually better off buying a home than continuing to rent.

Plano real estateAccording to NTREIS, the median sales price of single-family homes sold by North Texas Realtors was $204,000. That’s up 9 percent from a year earlier, while the median monthly rent for an apartment is $1,550 in North Dallas. That means renting would cost $18,600 per year, while buying a home (assuming a 20% down payment and 30-year term) would cost $15,000 per year in mortgage payments. In other words, owning is about half as expensive as renting in the long run.

Don’t Forget About Down Payment Assistance Programs

Say What?  That’s right – Down payment assistance programs are often utilized by first time buyers as the tool to get into their first home by providing up to 5% of the loan amount as down payment assistance.  The DPA is a gift/grant that never has to be repaid. Qualifications do apply for all DPA programs.

Rent vs. Buy Calculators

For more information about determining if renting or buying a Plano Home, take a look here and utilize this nifty calculator.

Renting may be a good short-term solution, but over the long haul, owning is almost always better. Call Warren Whitaker at 972.523.8353 or Warren@LendHome.com, your mortgage professional to learn more about Down Payment Assistance Programs and how to qualify.

Leave a Reply

%d bloggers like this: