Myth: Renting is Cheaper than Buying
According to a recent study that was published on MarketWatch.com, it is only cheaper to rent than buy a home in eight states and Nevada isn’t among them.
Buying a home may seem like a major challenge when trying to save for a down payment, but Nevada has very generous down payment assistance programs for first time home buyers, teachers, active military, and veterans.
Also, home ownership brings a variety of additional financial benefits noted below:
- Tax Deductions – The biggest financial benefit relates to income taxes. A Congressional Research Service study found that the average American homeowner saved approximately $1,900 a year on income taxes. Homeowners get tax deduction benefits which include closing costs, mortgage interest paid, property taxes, and others. These are deductions are not available to home renters and these savings will directly offset the cost of the ownership. This information is not always considered by many first-time buyers when evaluating whether they can afford a house payment that may be higher than their current rent.
- Monthly Cost – Consider as well that, depending on your down payment, mortgage rate and the price of the home, you could just end up paying less per month on your own home than you do for your landlord’s. This can vary dramatically based on current interest rates and home values in the area you want to live. Keep in mind as well that a fixed rate loan will have a steady monthly payment for as much as 30 years while your landlord can raise the rent at any time with 45 days notice!
- Building Equity – Your home can serve as a place to live and a form of “forced” savings account. Each month, a portion of your payment is applied to the principal portion of your loan and is like putting that money into a savings account. In addition, if the value of local real estate appreciates during the time of your home ownership, that appreciation also goes towards your home equity.
It is a very good idea to consult your tax specialist or CPA to help you understand the bottom line for you when deciding to rent or pursue first time home ownership.
To learn more about down payment assistance and loan programs in Nevada, complete the form below and one of our professionals will follow up to help further.
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