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11 Reasons Why You Should Buy Instead Of Renting
Renting Is For Suckers, Isn't It?
1. There’s pride in homeownership
Buying a home provides you with certainty; there's no risk that you'll be displaced by a landlord. Living in your own home also allows you the freedom to renovate and decorate your home as you please. It provides greater privacy. There’s pride and satisfaction in homeownership, which also closely ties you to your community.
2. Home owhership frees up a substantial portion of your income
Having a mortgage can lead to financial freedom. You end up owning an asset. You have a property to live in. You can have friends live with you. Average house prices have been consistently rising faster than average income in most developed countries. Home owhership frees up a substantial portion of your income for other investments, luxury purchases, holidays, helping your children, and of course an early, well earned retirement.
3. Mortgage payments dont vary that massively over the life
Mortgage payments in general dont vary that massively over the life of the loan, while rent payments keep going up. Having a mortgage and working hard to pay that off as quickly as possible is forcing us with our wealth management, forcing us to save longer term. Money that you pay towards the principal on your loan each month increases the % of your home that you own. In effect, you're paying yourself.
4. Buying takes the lead when you factor in retirement
I'll have a house paid off well before I retire, but somebody who's rented for their whole life will be spending a big chunk of their super/pension on rent. You are buying an asset that is yours and at the end of they day an asset that will have increased (potentially) in value substantially. Buying is good if you are planning to hold for long term as it forces you to save. Think of it as superannuation. A house can actually be much more liquid than a retirement account. You refinance or get a heloc in less than a month and there are no tax penalties for taking your money out before you are 65.
5. Capital gains on your PPOR are tax free
The thing to keep in mind is that you pay tax on your other investments but capital gains on your PPOR are tax free. Then in retirement your PPOR does not affect your pension but any other asset does.
6. Mortgage interest, including points, and real estate taxes are deductible
Home mortgage interest is very tax-optimized compared to other ways you might borrow money to fund more consumption that you can afford. Mortgage interest, including points, and real estate taxes are deductible, which reduces your taxable income. Taking out a mortgage loan, though, does give you access to equity. You can then borrow off this equity in the form of home equity loans or home equity lines of credit. If the US taxpayer and a bank is dumb enough to loan me several hundred grand a 3% for 30 years and give me a tax deduction sure why the hell not.
7. You can sell without selling
Mortgages allow you to sell without selling. Simply get a new mortgage, and pull the equity out of the house. You may then be able to use the equity to fund an investment such as shares or a managed fund.
8. Mortgage raises your budgeting standards
The stress of having mortgage can be a good thing as it raises your budgeting standards dramatically. For people who struggle to save when they have disposable income, a forced savings plan might be a good thing for them. Buying a house is a great thing to do when you’re settling down in a beautiful, affordable spot right near everything you need to do for the next ten years.
9. Tax free appreciation
While the structure never appreciates in value, the land a house sits on can appreciate in value due to changes in supply and demand. Over long time periods homes generally appreciate around 1% higher than inflation. You leverage your investment by buying the home with (mostly) the bank's money. You might put only 10% down, but your whole house (all 100%) of it appreciates every year. If you put $10k down on a $100k house, the whole $100k appreciates, not just the $10k you put down. Real estate is an appreciating asset (with inflation), and that appreciation is tax free.
10. Shorting the value of the dollar
The mortgage is a great way to borrow money due to all the government subsidies. Having a mortgage is a great way to short the US dollar because of the long maturity and low rates you can borrow at. When you buy a house on a long-term, fixed mortgage, you’re essentially shorting the value of the dollar (or whatever currency you use)—a pretty safe bet for any country printing money faster than it can get rid of it.
11. Rates are exceptionaly good
Historically, rates are good right now, and when compared to 30 years ago, rates are exceptional. The interest rates on a mortgage are generally lower than for other types of borrowing. Fixed rate mortgages are attractive because it’s comfortable to lock in a low monthly payment for a long period of time. Mortgages, in fact, are the cheapest money you will ever be able to borrow.
Helping People to Be Really Realistic
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by Alex Ershov @ 2019
Save Thousands Of Dollars
Make Right Decision
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