Is owning a home better than renting?
Owning your own home certainly has it’s benefits. There are so many I don’t know where to start. I can tell you from personal experience that the emotional benefits of home ownership were better than I had expected. The pride of ownership is something I had never had when renting property. When we own something, it is really an extension of ourselves, and we can fix it up and personalize it. Being able to put “sweat equity” into your real estate and knowing that it will benefit you, emotionally and financially the entire time you live in the property, and when you sell it is a great feeling. This is a feeling never realized by renters. When I bought my home, for the first time I really had a sense of community, and that I wanted to be an active member of it. I wanted to make my property and the surrounding neighborhood better for the greater good. Now that I have a vested interest in Palmdale real estate, I want to make the area a better place to raise my children. Now that I’m a home owner I’m concerned with the quality of the schools, the cleanliness of the area, local parks, and many other things that I wasn’t as concerned with before. Having a place to settle, raise a family, and really call your own is something of extreme importance. Not everyone is blessed with the luxury of really owning their own little pice of the rock we call Earth. Those of us lucky enough to be home owners in the Palmdale and Lancaster area certainly know the feeling of gratitude that comes along with it.
I suppose the financial aspect of home ownership would be another major benefit I should outline. As a Realtor in Palmdale, a lot of my friends ask me “is it better to buy a home or, or to rent? The advice I give them is always the same, and this is not just the salesman in me talking. Financially, it makes a lot of sense to buy a home and gain equity, instead of throwing your money away on rent which is building equity for your landlord, and making them rich. As a general rule of thumb, the value of real estate doubles roughly every ten years. The mathematics behind the benefits of owning your own home vs. renting are complicated so I will give you a general overview.
To keep my financial example simple, let’s say that I help someone buy or sell a house in the Palmdale or Lancaster, CA area and the home is $250,000 (you have to love Palmdale and Lancaster, CA for the affordable housing here). So… a $250,000 house, on a 30 year fixed mortgage, with closing costs of $13,462. A down payment of $8,750. APR 5.96% and an interest rate of 4.5% and the borrower is in the 28% tax bracket. We will assume that for our simple financial outline that rental increase is 2% per year and that the appreciation of the home being bought is also 2%.
In the above mortgage and financial model, over the course of five years, you could expect as a renter to pay $123,000 and gain no equity of your own. As a buyer of the same property, you would expect to build equity of $59,444. It’s a no brainer. Of course not everyone is able to buy their own home due to inconsistent employment, high debt to income ratio, or a number of other factors which make home ownership prohibitive to many. It is the American dream to own a home, build equity for you and your family and move up in the financial world. Without making the right financial moves such as owning your own real estate you hold yourself back from one of the best known ways to create wealth in America.
Homes for Sale in Palmdale, CA by Real Estate Agent Wes Darby
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