10 reasons to buy rather than rent

Over the last few years, buying a home has seemed like the very last thing a person would ever want to do. The subprime mortgage crisis and economic downfall left many homeowners unable to pay their mortgages and even looking foreclosure in the ugly face. Rates for home ownership have fallen by 4% since 2004, according to the Census Bureau.

But it looks likely that owning a home may once again be the great American dream, instead of an American nightmare. According to online real estate source Trulia, 98 out of 100 major metropolitan areas have rents so high that it is cheaper once again to buy rather than rent.

Maybe you too are on the fence about purchasing a home in the Cedar Rapids area—take a look at these 10 reasons to go ahead and take the plunge:

1. You can ramp up energy efficiency. As a homeowner, you have the power to place energy-saving measures in your home. Sure, a renter can take small steps like unplugging unused electronics and turning off lights when not in use, but those are small potatoes compared to the energy savings that could come from installing solar panels or upgrading to energy efficient appliances. But, depending on the size of the living space, however, a smaller apartment may use less energy than a large house, no matter what energy saving methods are used in the house.

2. You can customize your space. This can mean anything from simply painting a few rooms, installing new tile in the kitchen, or removing a wall for a larger master suite. All without losing a cent of your security deposit!

3. Homeowners purchase less furniture. Often when you’re renting, you need custom furniture that fits the space,” says Jane Hodges, author of the new book Rent Vs. Own, such as room dividers for a loft or miniature furniture for a basement apartment. “When people move a lot, they can end up buying a lot of furniture,” she says. However, if you purchase your home and settle in, you are more likely to purchase fewer pieces that will stay put for longer.

4. Owning a home “forces” you to save. This argument is widely-held: when homeowners pay their mortgage each month, they are putting that money into their house instead of spending it as disposable income on new clothes or entertainment. Then, eventually sell your home and pay off the mortgage, there’s a good chance that you’ll “walk away with a payoff,” says Hodges. (This may not be true for every homeowner in every market, however.)

5. Homeownership allows you to build a second income stream. There are more ways to rent out areas of your home besides taking on a roommate. According to Hodges, some homeowners will rent driveway space for commuters or a patch of their yard for someone without who wishes to grow some vegetables. Consider the needs or desires in your neighborhood, maybe you too could find a way to bring in a little extra money without a whole lot of hassle!

6. No landlord can kick you out. Surprisingly enough, some renters find themselves unexpectedly evicted from their home if the owner decides to sell to a new owner, rent to someone else, or end the lease for some other reason. For older individuals with a fixed income, it’s one of the reasons Boston University economics professor Laurence Kotlikoff recommends ownership, preferably with a paid-off mortgage. “It’s important for older people to be in a home that they own as security against a landlord,” he says.

7. You don’t even have to deal with a landlord.  A landlord may not see your leaky sink as urgent a matter as you do. It could take forever for a plumber to show up and fix the problem. Routine maintenance may also not be so…routine… as it would if you were in charge. As a homeowner, you can arrange for your own home repairs and maintenance as it fits your schedule.

8. A fixed mortgage can’t go up.  Even if inflation increases the cost of everything else, a fixed mortgage is just that. Fixed. Jack Otter, author of Worth It… Not Worth It? recommends that homeowners make a 20% down payment and take out a 30-year fixed mortgage to lock in the low rates being offered today. “Mortgage rates haven’t been this low since GIs were heading home from France. Lock in a low monthly payment, and you’ve just taken a huge step in protecting your family against inflation,” he writes.

9. Homeowners can take tax deductions. The main tax benefit of owning a home is the ability to deduct mortgage interest payments from your taxes. But there are other benefits as well, such as deducting the cost certain energy-efficient upgrades and in some cases not having to pay federal taxes on the sale of the home.

10. Take advantage of currently low interest rates and home prices. Mortgage interest rates are low, and prices as well in suburban areas. Overall, Trulia says that asking prices on homes have gone down .7% over the last year, but rents have gone up 5%.

Purchasing a home isn’t for everyone. But give me a call, and I can help you decide if purchasing one of the homes for sale in Cedar Rapids is the right decision for you!