Thursday, January 30, 2014 / by Thomas March
You may recognize Cheryl Casone as an anchor on FOX Business Network. Often seen interviewing industry leaders, including Sherry Chris, president and CEO of Better Homes and Gardens Real Estate, we decided to turn the table and ask Cheryl to provide her insights into the real estate market. Here are Cheryl Casone’s top five reasons why it’s beneficial to invest in buying versus renting:
Interest Rates at Historic Lows: We have never seen interest rate at these levels, and this time will likely not repeat itself in our lifetime. Rates on 30-year fixed mortgages are sitting at a national average of 3.3% thanks to the Federal Reserve’s target on inflation and monetary policy.
When you see the term QE (quantitative easing) remind yourself that is why it is the better to buy something now than rent. Yes, you will likely need to put 20% down but that is a result of the housing crisis we faced in 2008. It is a good thing that borrowers put 20% down because they are buying something they can afford, versus what happened five years ago.
The Tax Break: The mortgage interest deduction has been one of the most popular and useful tax breaks in modern times. When you rent, you cannot deduct that monthly payment.
When you own a primary residence, you are allowed to deduct the interest you pay on your monthly mortgage installment. This can mean the difference between owing the IRS on April 15th, and receiving a refund from the IRS. It is one of the main drivers why many aspire to own and not rent.
Value Return Upon Resale: Now that the housing crisis is behind us, we have seen home prices across the country (via the Case Shiller Home Price Index) rise for the last 9 months straight.
When you own a home, that value will be returned to you, unlike when you purchase a car and the value declines. Many markets across the country are forecasting double digit price returns for the rest of 2013. That is a crucial reason if you can afford to buy, you should do it this year.
Building Credit: Many first-time homebuyers will see their FICO score rise once they purchase a home.
As with any type of debt you currently hold, it’s crucial you make your monthly payments on time. But, if you DO buy a home, and you make those monthly payments on time, your overall credit score will see a nice boost.
Home Improvement: When you rent, the landlord will penalize you if you make structural or sometimes even simple cosmetic changes to your apartment or home. When you own, you are the boss, and you have the freedom to paint the walls bright orange if you wish. There is a freedom that comes with home ownership that can be fun and liberating!