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BUY VS RENT: WHY BUYING A HOME MAKES SENSE

There’s a question that buyers and renters have been asking themselves for a long time: is it better to buy or rent? Like the real estate market itself, the answer to this question changes over time. Ultimately, and objectively, the answer is “it depends.”

At the time of writing this article the real estate industry in my market (Chicago area) has rebounding from the 2008 collapse, values have increased quite a bit (but still not to the exaggerated values they were in 2007), and the market has stabilized with an expected 3.5% appreciation in 2015. The investors that flooded the market after the crash are now beginning to exit, leaving a great on-market inventory for home buyers to choose from.

Furthermore, and due to many factors, the demand for rentals grew over the last 5 years. With this surge of renters came a surge in rental prices.

As the market sits right now, the benefits of buying outweigh the benefits of renting. Here are 4 reasons why it’s better to buy

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Compared to what Chicagoans spend on rent historically, renters are currently paying 48% more of their income to rent. To make matters worse, not only are rents high, but vacancies are low. As vacancies drop, the demand for rentals increases, and as the demand increases so does the cost of renting. Which means that, yes, rents are high now, but because of low vacancy rates, they will most likely increase still.

According to Zillow Real Estate Research, interest rates are expected to shift and begin to modestly rise over the next year. As interest rates rise, home mortgage payments increase, that’s money that could be spent on a more expensive home or pocketed as savings.

It’s important to buy a home while interest rates are low so you can save as much money as possible. Historically, interest rates have trended downward, but that is expected to change over the coming years.

One of the greatest tax benefits of owning a home (if you’ve financed it), is the deduction of mortgage interest. You can itemize your taxes and according to mortgagecalculator.com, you can deduct “any interest…paid on mortgages for building, purchasing a home, or even a mortgage taken for home improvements…different factors can restrict a consumer from deducting this interest, so it’s important to speak with one’s financial advisor.”

Any points charged by your mortgage lender to obtain a mortgage, which can be thousands of dollars, can be fully deducted. Home improvement loan interest, property taxes, home office expenses, and equity loan interest are all tax benefits that can be deducted from your income tax.

Find out more about what you can deduct here:

http://www.irs.gov/

In Illinois, there are several programs you can utilize to help you with down payments. Each one has their own unique requirements – even though many of them are similar – to qualify for the assistance.

Through IHDA’s website, the Illinois Housing Development Authority, there is streamlined content to help home buyers achieve their goals of homeownership. Visit their website and see what kind of assistance they have to offer.

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