Are Mortgage Payments Better than Rental Fees?
When faced with the choice of owning their own home or paying rent, most first-time homeowners are truly stumped. Which would be the better and wiser choice for them to make?
There are those that advocate renting a home instead of buying one, simply because it comes out much cheaper than buying one, minus the taxes, improvements, and upkeep. They suggest that the money which would otherwise go for other expenses be invested instead, therefore earning more money than being tied up in real estate.
While there is a point in doing that, it must not be forgotten that buying a home means adding to your personal assets. It's not unlike buying a car (or two), jewelry, or stocks. The only difference between that is a house may be the most expensive asset that you'll ever have. Plus, despite depreciation costs on the home itself, the land will always appreciate in value
One point to keep in mind: once your rental payments are equal to what mortgage payments are to purchase a home in the same area, it's time to start shopping around for a house. It would not be much of a stretch to you to pay the bank rather than hand over that same amount to your landlord.
Plus, the amount you pay for the interest can be deducted from your income tax and possibly your state tax, too. Remember, your interest is the bulk of your payment so you are in essence saving a lot. And did you know that property taxes as deductible as well?
The plus you have when you've paid of your mortgage, especially when you've accelerated the payments, is that you can now use your asset (your home) to purchase more assets if you wish, essentially increasing your holdings. Then, you now become the landlord and receive those rentals for yourself!