If you’re VA eligible and you want to buy a home and hand out as little of your own cash as possible the absolute best choice is the VA home loan benefit. There’s no question. But not everyone wants to buy a home. Maybe not now or maybe not ever. Buying isn’t always the best choice based upon someone’s current situation and there are advantages renters have that buyers do not. Buying a home is a big decision and not really something where you have the option of changing your mind and backing out of the deal after you’ve already closed on the transaction.
Buying a home gives lets homeowners accumulate wealth over time in the form of equity. Mortgage interest on the mortgage is a tax deductible item and yes there are property taxes to pay when owning real estate but those too can be deducted from income and reduce the overall tax liability. Renters in effect pay the mortgage for their landlord when the monthly rent is greater than the owner’s house payment. But the renter has other benefits.
Renters provide flexibility. When owning, to get rid of the property and move somewhere else means selling the property or renting it out. When selling, there can be thousands of dollars in closing costs connected with the sale. Renters can move at the end of their lease period or even sublet the property to someone else should the lease agreement have such a provision. For those young in their military career, renting is much more compatible when PCS time rolls around. Renters don’t pay property taxes, either. When something goes wrong with the unit it’s the landlord that must make the needed repairs. Hot water heater go out? Property owners will have to shell out a thousand dollars or more to replace the unit. All renters need to do is make a phone call and the hot water heater is fixed.
Buying a home is probably one of the most important financial decisions you’ll ever make and over time it’s the best choice for most every veteran. But sometimes renting makes better sense, too.