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Top 5 Major Reasons Why it is Better to Own Than Rent

Owning a home has great financial benefits.

I am often asked, why should I buy a house? Is it better to buy a home vs renting? In a recent research paper, Homeownership and the American Dream, Laurie S. Goodman and Christopher Mayer of the Urban Land Institute explained:

“Homeownership appears to help borrowers accumulate housing and nonhousing wealth in a variety of ways, with tax advantages, greater financial flexibility due to secured borrowing, built-in ‘default’ savings with mortgage amortization and nominally fixed payments, and the potential to lower home maintenance costs through sweat equity.”

 

1. Housing is typically the one leveraged investment available

When you own your home it allows you to amplify any appreciation on the value of your home by a leverage factor. A 20% down payment results in a leverage factor of five, meaning every percentage point rise in the value of your home is a 5% return on your equity. If you put down 10%, your leverage factor is 10.

Example: Let’s assume you purchased a $300,000 home and put down $60,000 (20%). If the house appreciates by $30,000, that is only a 10% increase in value but a 50% increase in equity.

2. You’re paying for housing whether you own or rent

Some argue that renting eliminates the cost of property taxes and home repairs. Every potential renter must realize that all the expenses the landlord incurs (property taxes, repairs, insurance, etc.) are baked into the rent payment already – along with a profit margin!!

3. Owning is usually a form of “forced savings”

Studies have shown that homeowners have a net worth that is 44X greater than that of a renter. As a matter of fact, it was recently estimated that a family buying an average priced home this past January could build more than $42,000 in family wealth over the next five years.

4. Owning is a hedge against inflation

House values and rents tend to go up at or higher than the rate of inflation. When you own, your home’s value will protect you from that inflation.

5. There are still substantial tax benefits to owning

We know that the new tax reform bill puts limits on some deductions on certain homes. However, in the research paper referenced above, the authors explain:

“…the mortgage interest deduction is not the main source of these gains; even if it were removed, homeowners would continue to benefit from a lack of taxation of imputed rent and capital gains.”

Bottom Line

These are only my top 5 favorite financial benefits of homeownership but there are even more! From a financial standpoint, if you can achieve homeownership and opt for renting you may be cheating yourself. Owning a home is definitely better than renting if you have the financial ability.

Your local real estate expert is always happy to help.

Schedule a Free Real Estate Consultation

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Danielle Gaynor, REALTOR

Danielle J. Gaynor, RCC, MSRE

Residential & Commercial REALTOR®

Bennett Realty Solutions

work: 202-670-5471

office: 301-459-5040

e-mail: daniellegaynorhu@gmail.com

 

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Your local real estate expert is always happy to help.

Schedule a Free Real Estate Consultation

Danielle J. Gaynor, RCC, MSRE

Residential & Commercial REALTOR®

Bennett Realty Solutions

work: 202-670-5471

office: 301-459-5040

e-mail: daniellegaynorhu@gmail.com

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The Cost Of Purchasing Today vs Yesterday [INFOGRAPHIC]

Some Highlights:

  • With interest rates still around 4.5%, now is a great time to look back at where rates have been over the last 40 years.
  • Rates are projected to climb to 5.0% by this time next year according to Freddie Mac.
  • The impact your interest rate makes on your monthly mortgage cost is significant!
  • Lock in a low rate now while you can!

Mortgage Interest Rate Trends (last 3 months)

Powered by MortgageCalculator.org

Now that you have the information, what are you going to do? When you let me know your real estate goals, I can help you to make them happen! Schedule an appointment with me below if you are thinking about making a purchase or selling. Your local real estate expert is always happy to help you.

Schedule a Free Real Estate Consultation

Danielle J. Gaynor, RCC, MSRE

Residential & Commercial REALTOR®

Bennett Realty Solutions

work: 202-670-5471

office: 301-459-5040

e-mail: daniellegaynorhu@gmail.com

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NEW First-Time Homebuyer Assistance Program for Prince George’s County

Up to $20,000 Down Payment & Closing Costs

The Prince George’s County Purchase Assistance Program (PGCPAP) is providing home purchase assistance to eligible, first-time home buyers to purchase residential properties in Prince George’s County. Home purchase assistance includes down payment, mortgage principal reduction and/or closing costs.

  • Purchase price limit: $462,000 (resale or new construction)
  • Maximum loan amount: $15,000 for most cases
  • Buyers who are one of the following may be eligible for up to $20,000
    • Police Officer
    • Deputy Sheriff
    • Classroom Teacher
    • Firefighter
    • Emergency Medical Technician
    • Nurse
  • Household annual income up to 120% of the area median income (AMI) for the county
  • Home buyer(s) must contribute a minimum of 1.75% of purchase price (includes earnest money deposits, appraisal fee, inspection fees, homeowner’s insurance premium, credit reports, termite, housing counseling fee and HQS Inspection)
  • Loan terms: 0% interest, deferred payment, to be paid back when the home is sold, transferred or ceses to be the primary residence of the buyer(s) regardless of the length of residency

Guidelines and Program Manual

Program Website

REALTOR® Program Resources & Documents

Danielle J. Gaynor, RCC, MSRE

Residential & Commercial REALTOR®

Bennett Realty Solutions

work: 202-670-5471

office: 301-459-5040

e-mail: daniellegaynorhu@gmail.com

Schedule a Free Real Estate Consultation

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The Social Benefits of Homeownership

Thinking about becoming a homeowner? Here are a few benefits of owning your own home!

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