If you’ve never made the leap from renting to home ownership, the idea of buying your own home might seem a little scary.
Saving up for a down payment, qualifying for a mortgage, and finding the right realtor, the right home, and making the right offer can feel overwhelming.
But you know what’s worse? Getting stuck in a cycle of renting for years on end.
Every month you throw money away on rent is a month you could be investing in your own home, an asset that will help you build wealth over time.
Here in the Palm Springs area, an 800-square foot apartment will cost you about $1,300 a month. That’s over $15,000 a year!
And that’s just for a small apartment. A family needs more space. Renting a home here will cost over $2,000 a month. For that price, you could be making monthly mortgage payments on your own place.
But beyond putting your money into your own asset, there are more reasons why buying a house is smarter (and better) than renting. Here are the top 7 reasons you should buy your own home instead of continuing to rent.
Buying a Home Helps You Build Wealth
When you rent, your money goes to your landlord. But when you own a home, your money goes into an investment.
With each payment, you own more and more of your home, which turns it into an asset that you can turn around and sell. If you sell your home, the money from the sale pays off the remainder of your mortgage, and you get the rest right back into your wallet.
If the value of your home goes up (which trends indicate they will here in Palm Springs), then not only will you get back the money you put into your home when you sell, you’ll get even more.
Think of it as an automatic savings account. But instead of money in a bank account, it’s money in the form of your house. It’s a savings account that you can live in.
Don’t just take our word for it: The Federal Reserve’s recent Survey of Consumer Finances found that the average homeowner has a net worth of 44 times greater than that of a renter.
Buying a Home Provides Financial Stability
When you get a fixed mortgage, your monthly payment is set in stone for the duration of the mortgage. So if you get a 30-year mortgage, you’ll get locked into a guaranteed monthly payment that will never go up on you.
This fixed mortgage price gives you the ability to more securely plan for your financial future, since you’ll know your biggest monthly expense — housing — will never change.
The second benefit comes in the form of the alternative — if you rent, your monthly housing cost is pretty much guaranteed to go up. Here in Palm Springs, rents have gone up almost 10% in just the last year.
That’s an increase of $100 to $200 (or more) every single year. 30 years from now, you can expect rents to be much greater than your mortgage payment — a $1300/month apartment could be as high as $4,000 in the year 2050!
You Can Renovate and Update Your Own House
When you rent, you don’t have much freedom to change the place up. You probably can’t paint, you definitely won’t be putting in new appliances or remodeling the kitchen, and you’re stuck with whatever flooring the house comes with until the landlord decides to upgrade. Which, let’s face it, will probably be never.
When you buy a home, it’s your property that you can renovate and update however you like. Want to turn two small bedrooms into one bigger master? The freedom is yours. Feel like changing up the paint every other year? Not a problem.
But more important is the ability to renovate to increase the value of your home. New hardwood floors or a kitchen overhaul can be expensive, but a) you get to enjoy those upgrades while you live in the home, and b) the money you spend on those sorts of remodels isn’t thrown away — it lives in the increased value of your house, which will come back to you when you sell.
Plus, you can invest in energy-saving upgrades, like more efficient appliances, a new eco-friendly heating system, solar panels, and more. These kinds of updates are not only environmentally friendly, they’re also friendly to your pocketbook — they’ll save you money every month on your utility bill.
Owning a Home Lowers Your Taxes
You might be surprised to learn that home ownership is a bonus come Tax Day.
Homeowners can deduct the interest they pay on their mortgage payments from their tax bill. The purpose of this deduction is to incentivize home ownership.
By the way, those interest rates? They’re at historically low levels right now. Color us convinced.
You Can Earn Money By Renting Out a Room
If you want to save on your mortgage payment or just make a little extra money on the side, you can turn your home into a revenue stream by renting it out. That means someone else is paying you what you were paying in rent before you made the decision to buy.
You can rent out a room or an entire section of your house to tenants on a 6- or 12-month lease. That way, if you decide you want your whole house back, you only have to wait a few months.
If you want even more control, you can AirBnB out a room in your house. Choose the nights when you want a roommate, like when you’re on vacation or out of town, and keep the place all to yourself when you’re home.
With a home in Palm Springs, you can typically rent out a room on AirBnB for $100 or more a night. Not bad!
Buying a Home Helps You Build Your Credit
Good credit will help you get better interest rates on future loans, hook you up with low-interest credit cards, and qualify you for big item purchases. Why? Because a great credit score is a sign to lenders that you’re a reliable customer who is able to pay.
Never Have to Deal with Landlords Again
Surely there must be such a thing as a good landlord…one who isn’t nosy or invasive, who doesn’t give you a hard time about where you park your car, or about hanging art up on the walls.
We’re sure there’s one out there, but they can be few and far between.
Dealing with landlords isn’t fun. Buy your own house, and you’ll never have to talk to a landlord ever again.
Ready to Buy Your First Home?
If you’re finally ready to make the step toward a wealthier future and more stable present, we’re here to help you find your first home.
Brad Schmett Real Estate Group is the Palm Springs area’s best real estate team. And there are some stunning, sun-soaked houses for sale in Palm Springs.
Whether you’re looking for a charming home with an in-ground pool in a residential area, a property on a golf course, or a luxury house in Palm Springs, we’ve got the experts to help you find the right home at the best price.