The Advantages of Home Ownership Vs. Renting an Apartment
When it comes to a home, some people prefer the idea of renting an apartment. No bank loan is needed, and there is no long-term commitment outside of a lease. But there are several advantages to owning a house that can make it seem like the more logical option. Along with the responsibility of homeownership, there are also several rewards.
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Home Equity
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When you rent an apartment, no matter how much remodeling or fixing up you do, you will never be able to accumulate value in that apartment. Equity is the difference between what you owe on your home and what the home is worth, according to Melissa M. Ezarik, writing on the Bankrate website. The amount you owe on your home is your outstanding mortgage plus any liens on the property. As you make improvements to a home you own, the value appreciates and that increases your equity. You can borrow against equity to pay for your child's college tuition, a new car or to consolidate your debt.
Lifestyle
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In order to make major renovations to the apartment you live in, you first need approval from the landlord. An apartment building is populated by other tenants and limits your privacy. When you own your home, you can remodel it in any way you wish, so long as the remodeling is approved by the local zoning board. You can choose to live in a remote area where there are no other residents to worry about, and you do not have to keep the noise down because the neighbors upstairs are complaining.
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Taxes
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Renting an apartment offers little to no tax advantages. The interest on your mortgage and your annual property taxes can be used as deductions on your state and federal income tax returns, according to the Kiplinger website. To take advantage of this benefit, you need to have your deductions itemized. This is especially advantageous during the first few years of your mortgage when you are paying significantly more each month in interest than you are in principal.
Budgeting
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When you rent an apartment, you are unsure from one year to the next if your rent will go up. You also live under the notion that your apartment building could be sold at any time, and you may have to leave. When you own a home, you can get a fixed-rate mortgage that will insure that you have the same payment for the duration of the mortgage. So long as you make your payments, you do not have to worry about having to leave your home unexpectedly.
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