Why homeownership is better than renting

But the financial benefits are also significant, and can be more substantial than stock investing. Homeowners are allowed to deduct mortgage interest and property taxes when they file tax returns each year.

This significant savings from tax benefits can often make owning the same as, or cheaper than, renting. Have you found a lender yet? Find a local lender on Zillow. If you get a fixed-rate mortgage on a home purchase, your mortgage payment can never change. And, every time you make a mortgage payment, a portion of that payment pays your loan down each month, giving you more equity in the home. Housing inventory recently fell to a two-year low. Even with favorable mortgage rates, a first-time home buyer will likely struggle to find a residence they can afford.

However, thanks to higher loan amounts on conforming loan programs , you're able to finance more home. Tired of your rent rising? Sick of it causing your budget to change? When owning a home, and using a fixed-rate mortgage, that can never happen. Plus, there's no risk of a landlord trying to kick you out because he wants to sell the home. Want a better idea of what to expect? Use our simple mortgage monthly payment calculator to estimate your monthly mortgage payment for a new home loan.

Enter a home price, your expected down payment, and desired loan term to get an estimated monthly breakdown of payments. Being a homeowner means you have an opportunity to earn extra income by renting out a room. Maybe you bring in a long-term tenant to rent out your basement, or you look at short-term tenants via renting a room on Airbnb.

As a homeowner, everything is completely up to you -- how much you charge, how often you have someone renting from you, etc. There's no landlord to ask permission from or roommate that needs convincing. At that point, if you decide to sell your home, you stand to earn a profit that you could then roll into another home.

The money you spend on your mortgage every month and improving your home yields a long-term investment benefit for you instead of a landlord. Say goodbye to neutral walls and ugly carpet. When your home belongs to you, you can enjoy making each part of it fit your style. Of course, owning a home still might not be the right decision for everyone. It requires a certain level of financial and emotional stability.

So before you take the plunge, make sure the time is right for you and your situation. For itemizers, the benefits of homeownership will not disappear but will be smaller because of limitations on the ability to deduct state and local taxes and a lower limit on the mortgage interest deduction.

Owner-occupants also pay little or no capital gains tax when their home appreciates in value. Analysts often point to price appreciation to justify homeownership, but our study highlights the importance of comparing rents with home prices. In five of the seven markets Dallas, Denver, Los Angeles, New York City, and Phoenix , home price appreciation was higher than the national average, but only in Los Angeles were the financial returns higher than the Rent savings from owning in Denver, Los Angeles, New York City, the highest cost markets, were low relative to the cost of the home that is, purchasing a home was relatively expensive compared with the rent paid.

These results also suggest that the benefits from owning are higher in smaller cities and rural areas, where home prices are low. The returns on homeownership are not just financial, of course. Homeownership provides a stable place to live and an inflation hedge because mortgage costs are generally fixed while rents tend to rise with inflation. Homeownership has traditionally been an important way to build wealth.