What Are The Pros and Cons of Renting vs. Buying a House?
One of the questions that go through the minds of many consumers is the choice between renting or buying a home. Whether to buy or rent is one of life’s big decisions. You can take advice from many people but, ultimately, the choice will come down to your personal situation. What are your future plans? Do you have a secure income? Is flexibility important?
There are many things to consider, let’s take a look at some of the pros and cons involved in choosing between buying vs renting
. Hopefully, you will come away with a stronger knowledge base in the process.
The Benefits of Buying
Taking the big step to get on the housing ladder, can provide a sense of accomplishment and fulfillment. It ties you to a local community and allows you to design your living spaces in ways you never can when renting. There are many benefits to becoming a homeowner.
Your home will also be an asset that you can pass on to your children. It will grow in value over the years, which you could draw on if your situation changes and you need a lump sum. In the early years of a mortgage, the interest you are paying could be tax-deductible. Giving less money to the IRS is a nice bonus which could add up to thousands.
Having your own home gives you more security with mortgage payments which will normally be at a fixed rate. This means that you can better budget for your housing costs in the future. While homeowner’s insurance and property taxes may slightly increase every year the mortgage itself will remain the same.
You also have more privacy, with no landlord able to come around and check the place over. Nor will you have potential buyers walking though if the landlord decides to sell. If you want privacy in your backyard, you can have a fence or shrubs installed, it is your choice.
The Negatives of Buying
If you commit to a home purchase there are some downsides as well. Owning a home means you’ve planted your feet in that area and won’t be able to easily relocate. Now, of course, you can always sell or rent your home, but that can take time and money.
You could have more bills to pay. If something goes wrong in the house, it is your responsibility and expense to deal with. You may also find that the mortgage payments are higher than you would have been paying if you rented. The extra expenses of homeownership can quickly start to mount up if you are unlucky, and don’t have a stable income.
If you do need to move, you can run into issues thanks to the ever-changing housing market. You may find that your home is worth less than you paid for it if the market decreases. You have the choice of taking the loss or waiting for an upturn, neither of which may be great options for you.
These are some of the reasons some folks try to see if there is a possibility of renting to own
. Renting to own sometimes can be the best of both worlds for both the renter and the landlord. The resource at Maximum Real Estate Exposure does an excellent job of explaining how rent to own works.
The Advantages of Renting
When you rent, you have far more flexibility allowing you to relocate if needed for any reason. You could choose to move to another area every year, with leases normally lasting a year. If you aren’t certain of your current life situation, this gives you opportunities to change your mind. There are many benefits to renting a home. You should, however, always consider numerous things before renting
Renting from a landlord leaves them responsible for the maintenance of the home. They may even take care of the yard, and this can be a good saving on your living costs. Expenses when renting are usually cheaper than mortgage payments as well, and you could even find that you have more services included. Things like swimming pools, fitness centers, water, cable, and the internet, could be included in the cost of the rental.
The Downsides of Renting
When you rent you aren’t building an asset for the future. It is often said that renting is throwing money away when you could be paying down a mortgage. Not only that, but you are paying someone else’s mortgage in the process, or just making them richer. This also means that you aren’t going to benefit from home-buying tax-deductions
and renting could cost you more. If the landlord doesn’t renew the lease after the first year you’ll definitely be losing money, moving to and from costs money not too much the time involved.
Renting can mean that you find yourself in situations with neighbors that you would rather not be in. Often people who are renting care less about their local area and neighbors, leading to loud music and untidy communal areas. This can be something you will just have to put up with until your lease is over.
Final Thoughts on Renting vs. Buying a House
Whether you rent or buy, the choice will be based on where you are in life and what you expect the future to hold. It can be a very difficult choice in the present, but you will likely end up buying a home at some point.
Don’t worry too much if the time to make the commitment isn’t now, start saving for a down payment and build a good credit history. You will know when the time is right for you, and you should be in a better financial position then.
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