There's no place like home – but should you rent or own?

Whether you're currently renting or you own your home, if you're dreaming of someplace new, this may be a good time to consider whether or not to make your move. Let’s weigh the pros and cons.

Pros

Tax benefits

• According to the IRS, here are the costs you can deduct on your taxes:
  1. Real estate taxes actually paid to the taxing authority
  2. Interest that qualifies as home mortgage interest
  3. Mortgage insurance premiums

• Taxpayers who make some energy-efficient improvements to their home may qualify for the following tax credits:
  1. Residential Energy Property Credit
  2. Residential Energy Efficiency Property Credit

For more information, visit IRS.gov*

Equity

• As a homeowner, you create equity in your home when the value of the home increases and/or when you reduce your mortgage balance through consistent loan payments. The amount available will fluctuate based on market conditions
• You can borrow against your equity to make home improvements, consolidate debt and pay for college tuition or other expenses. This is a great option for homeowners who have adequate equity available in their home. However, be aware that market changes will affect your Loan To Value (LTV) ratio and you may end up owing more than what your home is worth if you decide to sell. See the TD Bank Home Equity comparison chart to find the right option for you
• If you sell your home, you can receive cash back on your sale through the equity available on your property. If the value of your home has significantly increased since you made the purchase, this could result in a sizable profit. The sale of a home may constitute taxable income to you. Please consult your tax advisor

Freedom

• As a homeowner, you have the freedom to make any changes you want because it’s your property. You can remodel your kitchen or bathroom, paint any room any color you want or put a satellite in your yard or on your home to get cable or internet service. Note: Condo owners may need to check with their property management company or co-op board prior to making some changes
• As a renter, you must have landlord approval to make any changes

Privacy

• While you do need to give out your personal and financial information to your lender, you no longer have to worry about giving this information to a landlord. You can be confident that the privacy procedures of your lender will protect your information at all times

Refinancing

• If you are a current homeowner and have made consistent payments on your mortgage, you may qualify for refinancing
• Refinancing may be a good idea if you would like a better interest rate, want to switch to a different type of mortgage, or adjust the length of your existing mortgage

Cons

• If you get a job transfer or find a great opportunity in an area far from your home, owning a home will make it difficult to move or relocate
• Owning a home will also limit your ability to move if you decide you want to live in a new neighborhood or get a bigger place

• Loan fees, closing costs and down payments can be very expensive and you may have to come up with money up front unless you participate in an assistance program
  1. Weigh the tax benefits of buying a home versus the earnings you could potentially gain by investing that money instead
• Here are some of the costs that you will need to pay:
  1. Down payment
  2. Loan origination
  3. Appraisal
  4. Inspection
  5. Title search
  6. Document preparation
  7. Attorney
  8. Settlement
  9. Prepaid (Interest, mortgage insurance, hazard insurance, flood insurance)

• If your home depreciates in value and you are in a position that requires you to move unexpectedly, you will most likely lose money on the sale
• Unplanned expenses or a sudden job loss may cause you to accrue large debts that do not fit into your budget. You can’t walk away from a mortgage as easily as a rental agreement

• As a homeowner, you either have to hire someone or do it yourself. It could be a small job like repairing a loose floorboard or a big job like replacing the roof. Not only will this take a lot of work on your part, it may also cost a lot of money
• When you rent an apartment or house and something goes wrong, you can call the landlord to get it fixed. A landlord is also responsible for landscaping and general upkeep of their property