Buy or Rent a Home
Whether your deciding to buy or rent a home is big choice both mentally and financially. There are pros and cons to buying and renting a home, and deciding which you choose often depends on some factors of your own, these can include your goals for the future, current financial situation, as well a life style you have grown to be accustomed to. Buying a home has proven to be a long-term investment opportunity that pans out well buyers as well as provide stability, but renting provides flexibility for those who see themselves going through change and has less stress financially.
Financial Considerations
When thinking about whether you want to buy or rent a home an important variable that needs to be noted is the financial variable. When purchasing a home there are some significant costs, these costs can include a down payment, maybe even closing costs, insurance, and even maintenance. While if you rent a home there isn’t a big financial stress, the biggest thing you will have to deal with is a security deposit and first month’s rent.
Purchasing a home does require a down payment and they can be pretty substantial, the average down payment cost can go up to 20% of the home price, and closing costs for the home are an can add up to an additional 5% of the home price. So in reality purchasing a home can be very expensive. On the other hand renting doesn’t cost as much money as buying a home, renting is usually best for those who don’t exactly got a lot in savings.
There are monthly payments associated with buying and renting a home. For people who own a home there are the monthly payments of the mortgage on the house, property taxes, and even maintenance costs, with these expenses it can add up. However people who deicide to rent a home don’t have to worry about substantial monthly expenses, when people rent a home maintenance and general repairs often come free with the lease.
A perk of owning a home is that is seen a good long-term investment and because of this the odds of the house appreciating in value are good. Purchasing a home can improve their equity. Unfortunately renters cant build or improve their equity when renting.
Flexibility vs Stability
Lifestyle preferences and future plans are a few variables in deciding whether to buy or rent a home.
Benefits of Renting
If your looking for flexibility than renting is the way to go, renting provides provides individuals to change location without worrying about selling the home they once lived in. Renters usually get a one year lease and with this don’t have to stay in the location they are in now for a long time. Renting is often best for those young and for those who attend school.
Advantages of Homeownership
When you own a home it gives you sense of stability. Homeowners don’t stress about rent increasing or being told vacate the home. Also they have told creative freedom to alter their home however they wish. Additionally owning a home provides the homeowner with feeling of being a part of the community and sense of belonging, because people who own homes tend stay in one location longer than renters.
To learn more about homeownership head to Habitat for Humanity.
Market Conditions and Location
Locations and geography play fundamental roles in the real estate game, even when determining whether to buy or rent a home.
Housing Market Trends
Housing prices can rise quickly making homes a good investment. However in some areas renting may be a better alternative because home prices might go up or down at any given moment. Also the interest rate on a home might effect the chances of getting a home if rates are more low than a home can be more affordable.
Location Matters
Cost is often different between buying and renting based on location. In major cities housing costs can be incredibly high, thus making renting a much better alternative. On the contrary in suburban areas buying a home is much more cost effective alternative than renting.
To learn more about market trends in real estate head to JP Morgan.
Maintenance and Repairs
There are responsibilities when it comes to home owning such as maintenance and repairs, people who rent don’t have to worry about these things.
Home Maintenance Costs
People who own homes are the ones who have make sure the home is well maintained and see over repairs even if these things are expensive. Roof repairs, plumbing problems, and replacing appliances can add to a lot in time. However renters don’t have to stress about any of these things, the landlord will handle these things.
Customization and Control
Renters often need to follow the rules of the lease agreement as well as the landlord’s rules, a home owner is able to set their own rules. Homeowners have the ability to change their home’s structure however they want. So control over a home is a big advantage for buying a home.
To learn more about home repair cost head to Home Keep.
Tax Benefits and Equity Building
Tax Deductions for Homeowners
Home owners may be able to get tax benefits on their mortgages which in turn can lead to good savings. However renters wont be able to receive these benefits.
Building Equity
Mortgage payments will go toward the equity in the home. In time, the equity in the home can become very valuable. Unfortunately renters don’t have this luxury and don’t get any value or benefit from home appreciation.
To learn more about what tax incentives there are with home owning head to IRS.
Conclusion
Whether you want to buy or rent depends on a person’s circumstances, lifestyle, goals, and stability. Renting is best for those who don’t have any current long term goals and for those who might have career changes and need flexibility. While buying is for those who want a sense of stability, seeking a long term investment, and to build their equity. So take these factors into consideration.