Personal Finance Essentials
Are You Ready to Buy?
Discover the Key Questions to Ask Before Making
One of Life’s Biggest Financial Decisions
Buying a home is one of the top three reasons Americans save money, alongside paying for college and funding retirement. It is a major financial decision, and in many ways it shapes everything else — how much you can save, whether you can afford to invest, and what kind of financial security you can build over time.
That said, home ownership is not the same kind of goal as retirement or college planning. You are not trying to grow money into a larger sum over twenty years the way you would for retirement. The planning strategies are different. Home ownership fits into the overall financial plan, but it should not be confused with long-term wealth-building investments.
Renting vs. Owning
There are real, concrete advantages to owning a home versus renting. When you own, your monthly payment on a fixed-rate mortgage never changes — it is the same in year one as in year twenty. Renters typically see their costs rise every year. The interest portion of your mortgage payment is tax-deductible, while rent is not. When your loan is paid off, the payments stop. Homeowners also build equity — part of every payment stays with you — while renters receive nothing back. If the home rises in value, the homeowner keeps those gains. And homeowners can design, renovate, and customize their home in ways renters cannot.