There are many advantages to owning a home in the Toledo area, both from a financial and mental standpoint. While there are many reasons why renters are nervous about taking the leap to owning their own home, it’s hard to ignore the benefits. The longer you wait to buy a home and continue to pay rent, the longer you wait to reap the benefits of homeownership. Here are 10 reasons why owning a home in the Toledo area is better than renting.
It’s Cheaper Than Renting
Although buying a home can be more expensive initially with a 20% down payment, it is likely to be cheaper than renting in the long term. According to real estate website Trulia, homeownership is 38% cheaper on average than renting nationally. Most of the time, you are able to get a house for the same or even cheaper than the rent you are paying, with a lot more room. The average sale price of a home in Toledo is $105K with an average of 1500 sqft. With a traditional 20% down, 30-year fixed-rate mortgage, your mortgage payment will average about $735/month. The average rent on an 811 sqft apartment in Toledo is $730/month.
It Forces You To Save
Although it is possible to get a mortgage for little to no money down, it is wise to save as much money as you can for your down payment and other initial costs that come with buying a house, like decorating and furnishing. Anyone who has had to save money for a large purchase knows that it takes discipline to budget properly so that you can reach your goals faster. Many experts argue that homeowners are more financially responsible because they’ve made the effort to save money for the down payment on their home.
You Can Build Equity
One of the most significant benefits of homeownership is building equity, which is your share of the value of your home. It’s the difference between the market value of your home and the amount that you still owe. If you pay 20% down on a home that costs $200,000, you would owe $160,000 and your equity would total $40,000 (the interest you’ll pay doesn’t factor in to this equation). However, if your home appreciates in value, your equity increases even though the amount you owe does not.
For example, the market value of your home increases to $275,000, and you’ve paid off a total of $70,000. You still only owe $130,000, but your equity would be valued at $145,000. A study conducted by Merrill Lynch found that while homeowners under the age of 35 have equity valued at $53,700 on average, homeowners over the age of 65 have around $212,800 in home equity. If you buy a home now, imagine how much equity you could have by retirement! Instead of your money disappearing into your landlord’s pocket each month, you’ll be paying into something that can become more valuable over time.
It Increases Your Net Worth
Homeownership is an excellent way to build net worth. You can calculate your net worth by subtracting your financial liabilities from your assets, which include investments, savings, retirement funds, home equity, and other valuables. Unless you’re consistently saving and investing your money through other means, a house can serve as a way to store your wealth and build your net worth.
Your House Can Appreciate In Value Over Time
While property doesn’t always appreciate in value over time (remember 2008?), many experts believe that the worst is behind us. If you do your research, your home’s value may increase each year that you own it. Zillow estimates that the average house appreciates in value around 3.5% each year, but some areas experience steeper increases.
When deciding on your future home, it would be best to avoid areas with a high traffic volume, foreclosures, and crime because your home could lose value. However, qualities like good schools, up-and-coming neighborhoods, local employment are signs that your new house could end up being worth more than its buying price.
You’ll Feel More Secure
You won’t find homeowners desperately looking for housing after receiving an eviction notice. Unless the bank forecloses on your house, your home is yours until you decide to sell it.
You Can Create Your Dream House
As a renter, you’re basically living in somebody else’s home and are subject to their rules. Want to install a shelf in your bedroom for your book collection, or change the color of the living room? You better ask permission. Want to knock down a wall to make more space? It’s probably not going to happen. When you purchase your own home, you have more control over the redecorating and remodeling. If you fantasize about customizing your dream house, purchasing your own home is the only way to make that dream happen.
You Can Rent Out Your Home
Contrary to what you might think, owning your first home isn’t the end of the road for many homeowners. Although homeownership is a long-term commitment, many homeowners go on to rent their homes when they purchase a second one, rent out extra space to other tenants, or use services like Air BNB to create monthly recurring income for very little work.
You’ll Feel Better About Yourself
Homeowners often feel more at peace and in control of their environment when they own their own home. In the Freddie Mac survey, renters admitted that homeownership has psychological benefits, with 91% agreeing that owning one’s own home was something to be proud of, and 76% said that it was a sign of success.
You’ll Have Something To Pass On To Your Children
A parent’s financial success can determine what school their children attend, the peers their children grow up with, their educational opportunities, their college prospects, their future career prospects, and their ability to grow wealth as adults. In a study published in the Journal of Housing Economics, researchers found that children of homeowners earned more as adults and were more likely to own their own home in the future. In a Freddie Mac survey, 90% of renters agreed that a home was something that could be passed on to their children.