Have you fallen into the thought trap that real estate is no longer the great investment it used to be, so why bother buying a home? There are plenty of great reasons to own a home rather than renting. Here’s 5:
- Be your own landlord. A landlord can kick you out pretty much whenever they feel like it, or they can decide to sell the property or move in and live there themselves. The lender can only kick you out if you fail to pay your mortgage. That’s a situation over which you have much more control.
- Paying the principal is forced savings. Yeah, it is possible that home prices may fall further. It’s also possible that your retirement account will lose money. In the long run, both are likely to make some gains. And, you can’t live in your retirement account.
- Fixed-rate mortgages never rise. Determining in advance what your rent will be from one year to the next can be difficult. With a fixed rate mortgage, not only do you know what your payment will be eventually you will pay it off. Mortgage rates are at record lows. People who buy now are locking in real bargains.
- Good schools. The areas with the best schools rend to have fewer family-sized rentals available.
- Spacious properties in pleasant neighborhoods. As with finding good schools, generally, the best neighborhoods do not have many rentals available. Sizable homes in attractive communities are almost always owned – not rented.
So, that’s five to get you started. Still not convinced? Check out this calculator from Ginnie Mae and prove to yourself that you can save money by owning. In Kern County, you want to enter 1.1% for the property tax rate. I used 5.5% for interest and 0% for appreciation in comparing $750 in rent to a $150,000 purchase price, in 10 years of homeownership you are more than $20,000 ahead of where you would be in renting expense.
What other reasons can you think of that make it better to own a home than rent one in Tehachapi (or elsewhere for that matter)? Share your comments below. We love to hear from you!