Should you buy a home or rent? It’s a question many people wrestle with at some point in their lives. As you weigh the pros and cons of each, don’t be fooled by these four buying vs. renting myths.
If it’s a buyer’s market, you should buy now.
The tax advantages from owning a home are so great that you should always buy.
Due to recent changes in tax laws, the tax advantages of owning a home aren’t as helpful as they once were. For example, there’s a limit on the amount of state and local taxes you can deduct on your federal return. Please remember that tax laws differ by state, as well as the tax bracket you’re in, so check with your tax professional to help decide what makes sense for you.
You're throwing money away by renting.
- Less hassle – You don’t have to maintain the apartment building and surrounding property.
- Greater flexibility – You can change apartments much more quickly than you can change homes. Plus, it’s easier to travel if you rent.
- More financial freedom – You don’t have to spend a large lump sum on a down payment or pay property taxes. As a result, you can invest that money in other ways.
You need perfect credit to buy a home.
Actually you don’t need perfect credit history to get a mortgage—but strong credit does help. A high score can improve your loan approval chances and interest rate. If you don’t have strong credit, all is not lost though. Here are some ways to improve your credit:
- Pay your bills on time
- Don’t max out your credit cards
- Correct any errors on your credit report
- Keep your debt-to-income ratio below 20 percent