Buying your own home is the American dream.
But with the downward spiral of the housing market and the weak prices of home values, investing in your own home is now a decision that many potential home buyers are reconsidering.
In the years ahead, is buying your own home better than renting?
Use this comparative guide to find out if renting or buying a home is right for you and your family.
Buying a Home
For many people, the idea of owning their own home is as American as apple pie. And this includes the government as well. For over the last one hundred years, the American government has been investing in homeowners. From early federal stimulus acts of the Great Depression to today's bail out of Freddy Mae and Fannie Mac, our politicians want you to own a home. While the government continues to blindly encourage home ownership, the real question is: Is it the right thing for you?
There are many reasons why you should own a home, but are they the right reasons? Investment opportunities are one of the most common reasons touted for owning your own home'it will make you money. But the truth is, owning a home as an investment is a strategy that's unfounded. The average home appreciates at about 1 percent per year after inflation. That's not a great return on your investment if you're looking to make money. Factor in the cost of living, repairs, maintenance and taxes and you've got a cost that's easily as much'if not more than the cost of renting.
While there is no reason to think you'll make money off of your home or save any more money than renting, there are many benefits to owning a home:
Homes are very affordable right now and good deals can be found everywhere
Many government programs can help you to buy your own home
Owning your own home allows you to build room additions as you and your family expands
Being a homeowner provides certain tax incentives and breaks
Renting a Home
Renting your own versus owning a home is a long debated subject. Are you just throwing your money away each month when you could be investing in a new home? That's really up to certain factors about your future plans. Are you going to move soon? Is your job secure enough that you'll be able to pay off a mortgage for 30 years?
Knowing where you'll be and how stable your income will be in the next 5, 10, 15 and 30 years from now can help you make the right decision when deciding whether to rent or buy.
Renting or buying a home is also about how much you're willing to spend on the initial down payment. Will you have the money to start the wheels turning? Many times, the initial cost can be too much out of pocket expense for new home buyers on a tight budget. Renting a home is definitely the cheaper option in the short term, but overall long term costs need to be factored together to determine if renting or buying a home is the right choice for you. .