If you find yourself in the midst of deciding whether you should buy or rent a home, chances are that the topic remains an intimidating issue to confidently address. However, there are pros and cons associated with both buying and renting a home. In this post we take a look at what those differences are.
Factors to Consider
When you own a home, you are primarily responsible for all of its functions. The same can be said when repairs need to be conducted. However, when you rent a home, if something breaks, the landlord is responsible for any repair issues that manifest themselves.
If you like the idea of exploring other states or if you are uncertain that you want to live in the same location forever, renting may be a more ideal option. The key thing to remember however, is that you should avoid lengthy leases if you consider yourself to be a ‘wanderer’. And while it may be true that you can resell your home and move to a new location, depending on the housing market of the location of your property, your house could remain on the market for years.
The price of renting a home is typically less than making a mortgage payment. Renting a home can save you hundreds and even thousands of dollars in expenses.
Noteworthy Pros of Homeownership
1) Excellent Long Term Investment Potential
Statistics gathered from the federal Reserve Bank showed that the average price of American homes increased by 28% over the last ten years. As such, by purchasing a home you are essentially investing in yourself as opposed to a property management company.
2) Greater Privacy
Unlike a rental home, you can renovate your own home to your liking.
3) Fixed Expenses
Rent payments can increase once an individual chooses to renew their lease. On the other hand, a fixed-rate mortgage means that you will pay the same amount for interest and principal until the entire mortgage is paid off.
Cons of Owning a Home
1) Less Mobility
When you own a home, in a way you become less mobile. For instance, if you get a lucrative job offer in another state, you will not be able to easily relocate and take said job offer.
2) Potential for Property Values to Decrease
In some instances your building could depreciate over time, and this is especially the case if you can’t afford to maintain it.
Pros of Renting a Home
1) Low Upfront Expenses
Unlike the concept of getting a mortgage and coming up with a down payment for a new home, the only thing you will need when renting is the first month’s rent payment and a security deposit.
If you decide that you want to relocate, having a mortgage can make this impossible. But, by renting a home, you can make plans to relocate once your lease expires.
Cons Of Renting A Home
1) Inability to Change the Property
Unlike homeowners, if you want a fenced yard or deck for entertaining your guests, you will not be able to do this.
2) No Credit Score Improvement
Making monthly payments towards a mortgage will lead to improvements in your creditworthiness. The same thing can’t be said when it comes to paying rent.
3) Potential for Rent to Increase
Sometimes, you become comfortable with the amount that you pay every month for rental expenses. However, you may start to feel a great deal of discomfort if the rent gets increased once your lease comes up for renewal.
Many people believe that renting is just throwing money away that could otherwise be going towards an investment in home ownership. While this way of thinking is technically true, it could cause you to rush into a bad decision and end up in a living situation that’s not ideal for you. At the end of the day, neither renting nor buying is a superior option; it all depends on your circumstances and needs. Weigh the pros and cons carefully before becoming a homeowner, and make sure it’s the lifestyle you really want.