Owning vs. Renting

 

There are many benefits attached to having a house, including how its prestige and a certain peace of mind that can come with it.

Below are some of the main reasons why you should have your own house:

The Mortgage Rate is Low
One of these outstanding advantages is that becoming a homeowner is simpler than ever. In other words, it is relatively cheaper to borrow money for a home now than it was a few years ago.

Interest rates vary through the years. Several years ago, interest rates were higher and it would have been more expensive to use these mortgage plans. Since these costs have been reduced, it is now easier and cheaper to own a house.

You Enjoy an Exclusion in Capital Gains

You will be able to enjoy an exclusion in capital gains after two years. The house you purchase must be your main residence.

When the house is sold, you can obtain profits of around $250,000 if you’re single, or around $500,000 if you’re married, without owing any taxes related to capital gains.

This may sound weird. Indeed, the worth of your home could increase despite the depreciation in the price of houses in the past years.

If your home was bought any time before 2003, there are chances that its value has appreciated and you get to enjoy the benefit of this tax.

Equity is Built Every Month on the House
Equity is the amount you can sell your house for, excluding the money you still owe on it. The amount you owe will reduce each month you make a mortgage payment.

This reduction you experience in your mortgage each month boosts your equity.
With the introduction of the new mortgage rules, every risky mortgage, such as interest-only loans and negative amortized, are totally eliminated.

The principle involved in mortgages is that there is a slight monthly increase in the portion of your principal payment. This is done annually.

Your equity is usually the lowest during the first payment, and highest at the last payment. Therefore, your equity increases as each month and each year passes by.

It is Cheaper to Buy a House than to Rent One in the Long Run
Things may be kind of frustrating in the beginning, due to the high interest rates of mortgage payments. At times, you may even think that it is cheaper to rent a house.

After a while, the interest rate will begin to decrease. You will discover the interest you pay is lower than what you would have paid for a rental.

You would probably prefer paying for your own home instead of helping your landlord pay for his.

Homeowners Enjoy a Standard of Living that is More Stable
There is always a pleasant feeling attached when you have your own house. This feeling brings a sense of freedom and independence.

The home you live in belongs to you and only you (or your spouse as well), you can do whatever you want. You have full control over the house. You do not feel daunted about increases in rent costs, or the risks of being kicked out of the house, and you are free to make improvements and changes as you wish.

Also, owning your home gives your children the guarantee of attending the schools in the area.
You never have to worry about a quick notice from the landlord to vacate your rented house or apartment for a variety of reasons you have no control of.

There is a Great Benefit Enjoyed by Homeowners in Tax Related Issues

There are significant tax benefits associated with buying a house. Both at the time you purchase it and for the duration of time you own the home.

You enjoy your first benefit the same year you acquire your house, discount points can be claimed on the loan, not minding who made the payment. What do I mean by points? Mortgage points are generally of two types: discount points and origination points. Each of these points is equivalent to one percent (1%) of your mortgage.

Discount points involve prepaid interest, are deductible tax-wise and can reduce your total mortgage payment.

While organization points are not deductible tax-wise, they can be negotiated and are not always required. Organization points are also able to compensate lenders.

The interest rate on your mortgage typically lowers by 0.25% as you buy points.

Over time you can deduct the interest paid on the mortgage from the taxable income. This makes it possible to achieve substantial savings at the initial stage of your mortgage.

The bulk of your payments is made up by interests. Although you may not be happy about paying taxes on a newly acquired home, it is possible for you to subtract these as well.

Any Maintenance or Improvement Made is for Your Own Good

Once you buy a house, you are not restricted by anyone to carry out maintenance work of your choice. It is your property, and you are responsible for any actions or changes you decide to make.

You can either employ the services of a contractor for maintenance services or you can handle it yourself.

can only enjoy improvements made in your rented house for as long as you’re renting there. Once you leave, the homeowner benefits from the improvement.

Negatives of Owning

We know that owning a home is not always sunshine and rainbows, so here is a list of some of the disadvantages that come with owning a home:
·
You are responsible for the repairs and maintenance. This means both sides, because it can go both ways.
 
While most rent leases specify that the landlord/owner is responsible for making repairs, when you own your house you need to remember to save some extra money for maintenance.
 
There is no way around that.
 
However, with the right team and a little positive thinking, maintenance can be fun.

Considering the career and income uncertainty we are all faced with, people can definitely be put in bad spots throughout the years.
 
During these moments, it might be difficult to make the mortgage payments and keep the house.
 
Flexibility.
 
With the increased flexibility of the job market, we are also required to be much more flexible than we used to be.
 
Owning a house will definitely give you roots and a sense of precious family security, but it also means you are tied to one region.
 
The Negative Aspects of Renting
The monthly rent you pay goes to the landlord. It represents the fee you pay for using their property.
 
It will never amount to an investment, because no matter how long you stay there, the paid rent will never earn your property rights or ownership status.
 
All the structural and decorative home improvements you make will have to stay behind when you move to a different place.
 
Additionally, you might need approval for any desired major redecoration.
 
We all like to pamper and improve our homes. However, if you are renting, you should definitely consider the cost-value of the desired modifications and if they are worth it in the long run.
 
Renting does not build your equity.
 
With a monthly mortgage payment that is based on a principal and interest, the principal adds up to your initial down payment to increase your true ownership of the place and build your equity.
 
That does not happen with rents, where the entire payment is not an investment, but just a fee for using that place.
 
Renting is unfortunately not an investment, but part of an increased living cost.
 
Mortgage payments represent true financial property investments.
 
They protect against inflation as they gather to form a concrete investment that you get to benefit from, after a certain amount of years (home market value goes up with approximately 5% every year).
 
In comparison to that, rent is simply a cost that adds to your monthly living costs. Rent payments have no investment components.
 
You have no control over your rent, something that can make long-term budgeting very difficult.
 
As the rent amount might fluctuate, this big-budget part of your living cost can cause major changes in your life.
 
Renting lacks the permanence and sense of security that a family has when having a place to call their own.
 
It does not always give you the freedom to smoke inside premises, make home improvements, or even have pets.
 
Renting is not always cheaper!
 
Considering the investment and the equity aspect of a mortgage, as well as the increase in rent prices and moving costs, rent can actually turn out to be more expensive than buying.
 
·         Maintenance however, can greatly depend on the region you live in and how good you actually are with your tools when it comes to repairs and redecoration.
 
While this might be a never ending debate, there are a number of hidden benefits that only owning a home can provide.

We’ve already mentioned most benefits, but here are the biggest factors that drive people to home ownership.
·        
 Your savings are not subjected to inflation, and neither is your mortgage payment!
 
If you opt for a fixed payment mortgage, both the price of your house as well as your payments will be locked to a fixed sum for the next 15 to 25 years.
 
That means that no matter the inflation, you will continue to pay your normal monthly mortgage rate.
 
Then at the end of the mortgage period, own a beautiful home for you and your family to enjoy.
 
·         It is a great investment.
 
Once you buy a home, the price of the house is fixed to that specific amount.
 
This means the credit and mortgage payments will stay the same, no matter how much the value of your home increases.
 
There can be nothing better than leaving a home behind as a legacy for your children to enjoy.
 
 
An investment in a home can also mean an investment in the future of your children.There is a lot to consider when you want to buy a home.
 
Getting yourself to switch from renting to homeownership is a highly challenging, but an exciting and amazing decision to make. And no matter what people say, owning a house is the first step in the direction towards the home we've been dreaming of. Because, at the end of the day, as we all know, there is no place like home.
 

 

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Ricardo Medeiros
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When preparing your home for sale, you need to fix things up, declutter, perhaps slap a fresh coat of paint on a few walls. That’s all part of getting your property ready for buyers.

But there’s another type of preparation that you also need to do. And, the sooner you do it, the less stressful your move will be.

You need to get all your paperwork together.

Here’s what to gather:
 

  • Property documents such as deeds, easements, surveys, liens, etc.
  • Mortgage documents, plus any other loans (i.e., line of credit) that use the property as collateral.
  • Maintenance and service agreements that may continue with the new owners.
  • Warranties and guarantees that are transferrable to the new owners.
  • Recent utility bills, such as water, electricity, etc.
  • Rentals (i.e., water heater rental.)
  • Home security agreements and codes.
  • Contracts for any work done on an ongoing basis. For example,
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Getting these records together early will ensure you’re not scrambling at the last minute to find them. Some of these documents, such as warranties, also make for attractive selling features.

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When considering whether or not to sell their home, many people think about market conditions. They consider whether it’s a buyer’s or seller’s market. They look at trends. They try to time the sale to get the best price for
their property.

While market conditions certainly can play a role in deciding whether you should sell now rather than later, many other factors can influence that decision too.

For example, you might have outgrown your home and need more space. Perhaps you need an extra bedroom or a larger kitchen. If you wait until market conditions are perfect, you may languish for months — or even years — in a home that’s too small for you.

The same can be said for downsizing.

Another “non-market” reason you might want to sell your home sooner rather than later is the neighbourhood. Is there another community more suited to your lifestyle that you want to get into? If it’s a particularly desirable area, you don’t want to wait too long to make a move. If you do, you might lose some good opportunities.

There’s also the emotional side of the decision to consider. You might simply want to move for no other reason than you need a change. That’s as good a reason as any to put up the For Sale sign and find your next dream home.

Other non-market reasons for selling include:
 

  • Wanting a shorter commute to work.
  • Desiring a different style of neighbourhood. (Rural rather than urban.)
  • A change in family situation.
  • Living closer to relatives and friends.
  • Wanting a particular property feature, such as a backyard with
    mature trees.

 
The point is, don’t just consider market conditions when deciding to sell. Look at all the reasons and then move forward with confidence. After all, you can sell and buy in any market.

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What is it about your property that stands out? What will buyers like most about it? What are your home’s most enticing features?
 
Answering those questions will help you determine which features to emphasize when selling your home. After all, you want buyers to notice and appreciate your property’s best characteristics.
 
But here’s the challenge...
 
It can be difficult to determine which features of your home are particularly desirable to buyers. You live there! So, there might be a fantastic characteristic of your property that you’ve gotten used to. You might not even realize its value.
 
One way to gain perspective is to ask friends, “What is it about our property that you like most? What stands out to you?” Ask them to be candid. Often, they’ll reveal characteristics about your home that may surprise you. You’ll definitely gain insights that will help you when listing.
 
Another technique is to compare your property to others in the neighbourhood. Buyers often target neighbourhoods, so realizing how your home stands out can be helpful when marketing it. For example, your property might have a larger backyard than most others on the street, or it might have a lot of recent upgrades.
 
Another way to discover your home’s most attractive features is to talk to me. I can tell you what buyers will like most about your property.

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