The debate about leasing or buying your home has been on for centuries, and it is not going to leave our internet or topic space anytime soon because people are always looking for houses to lease or buy.
As a person with personal and financial goals, it is essential to set the marker down before embarking on any of the project mentioned above for your family or yourself personally. You need to know why both situations are unique in their stead and why they differ a little or entirely for individuals.
Leasing a home personally and financially allows you to skip worrying about the maintenance cost, mortgage interest, taxes, etc. It will enable you to move quickly and explore other places that might fancy your interest and lifestyle. Provided you have the financial capacity to meet up with your leasing agreement; it can help you build enough money through savings.
Buying a Home
Conversely, buying a home is a much more different affair, while leasing might build your savings, buying builds the equity you have in your home as you continue to pay the mortgages and interest, together with how quickly the value of homes around your neighborhood appreciates.
Value of Homes
If the value of your home does not appreciate over time as you continue to pay those interest and mortgages, your equity also decreases.
The aspect of buying a home and building equity can only happen in the long term. If you are a home flipper( buy and resell), you will find out that after making your initial
deposit and interest, it doesn't profit you if, during the time you are planning to sell the home, the prices of homes in that area is in a downward slide or inflation happens.
Furthermore, interest rates on a mortgage can be pretty high during the first years with little attention given to the principal amount. But as the years of holding the property increases, your mortgage payments also decreases.
To get better benefits while filing your tax returns, itemize your mortgage interest payments as well as other deductions so it can be deducted from your taxes. If you use the standard deduction rate for all your deductions, you might not save much on your mortgage interest.
The problem however with buying a home is that people tend to think they only have to deal with interest rate and the mortgage payment, but it is not always so.
Modern homes today factor in a lot of extra expenses before buying a home like;
- Maintenance cost
- Insurance for homeowners
- Mortage insurance
- Property taxes and much more.
We can see from both scenarios leasing and be buying a home are the two different ball game.
The only thing that sets them apart is that part of buying is an investment in equity if prices for homes increases and you are willing to sell.
Except the amount of money saved during leasing can be better put in investment, it is always better to own a home when you can financially plan.
