VISHAL SHARMA
We’ve all heard the cliché that if you’re renting, you’re wasting your money. But is that true? Is it better to rent or buy?
For generations, buying a home was considered the cornerstone of the American dream. However, in recent years, people have been debating whether buying a home is always better than renting. There are arguments both for buying and for continuing to rent, depending on a potential homeowner’s individual circumstances.
A common argument in favor of home buying is that owners are building equity in a valuable asset that can boost their long-term net worth. By contrast, paying a landlord rent each month and paying for renters insurance seems like spending, rather than saving. But buyers who focus simply on the monthly mortgage payment versus monthly rent might overlook some additional, hidden costs of ownership.
You need to budget for the cost of property taxes, insurance, and regular maintenance (including your time and effort as a homeowner). It is also recommend budgeting at least 1 per cent of the value of your home each year to cover routine maintenance.
Buyers hoping a home will improve their net worth should also make sure they are actually building equity in that asset.
Many buyers assume that the additional costs of home ownership will be offset by tax savings generated by the mortgage interest deduction. Before you start counting on those savings, consider about new tax laws where deductibility is limited to the interest on up to $750,000 of debt on home.
