Renting vs. Buying: Pros and Cons
November 24, 2020
For most of us, deciding whether to rent or buy a home is a major life decision. Which is ultimately right for you? There is no easy answer to this question because it depends on age, finances, occupation, plans, market, and more. If you’re on the fence about whether you should rent or buy, read on to find out what you should consider before making this decision.
Should I Rent?
First off, let’s clarify something. Renting is not a waste of money. Sure, giving your money to a landlord may mean you’re not investing in homeownership. But, you’re paying to live somewhere! As long as you’re paying to live, your money is well-spent.
Depending on where you are in your life, there are a few situations in which renting would be the ideal situation. Although renting as a way of life is not something we recommend.
One of the most common pros of renting you will hear is that you have the flexibility to move around with ease. If your job often requires you to relocate, such as our military service members, or if you don’t plan to stay in the same area for a long time, renting would be an ideal situation. Because, to make buying a home worth the investment, you need to stay in the house for two to three years. Whereas when you rent, you do not need to remain in the same location, especially if you don’t like the area you live in at the end of your lease.
Don’t Need to Pay for Maintenance
We’ve all experienced unfortunate moments where the faucet pipe bursts or the stove won’t work. As a renter, you don’t need to call a plumber or make a trip to an appliance store. Instead, you just call your landlord. One of the biggest perks of renting is that you don’t have to worry about surprise repair costs or responsibility.
No Property Taxes
As a renter, you don’t get the property tax bill, so you technically don’t pay it. But, be aware that your landlord may pass this cost on to you, so you still end up paying it in a roundabout way. If you find that your landlord is passing on too much cost for your liking, you can always move on by moving out.
Rates Can Increase
With ultimate flexibility comes uncertainty. Even if you find a killer deal in a great area, unfortunately, your rent could go up the next year. You won’t know until the time arrives, which means your annual budget is always uncertain.
our monthly rent payment is accruing your landlord’s wealth, not yours. As a tenant only, you have no financial incentives into the property, including tax deductions, equity, and no benefits from rising property values.
When you rent, you have limited ability to customize your living space without your landlord’s consent. Want to update the kitchen to be more modern? You may not be able to without their approval, especially if they must pay for the upgrades. You have limited say in how your place looks. e.
Should I Buy?
Making a Home Yours
You have the satisfaction of making this home yours. When you are paying rent, that money is gone, never to return to you again. But when you are making payments on a home, every payment is bringing you closer and closer toward full ownership of your home.
Cashing in on Your Equity
Your home can increase over time, depending on the market. But what this means is that your home can increase in equity. Homeownership is the equivalent of a forced savings account. You pay your lender every month, but ultimately the cash comes back to you in the form of equity as your home’s market value appreciates over time. Once you have equity built into your home, you can cash that money out.
When you own a home, you begin to accumulate costs. However, that cost is tax-deductible! You can include these deductions when you file your taxes, such as what you have paid out in your mortgage interest and property taxes.
One of the best perks of buying a home is the unlimited freedom to customize your living space as much as you like. As a homeowner, you can renovate your home as often as you want! As your taste changes, you can improve or upgrade your home with no landlord dictating you.
Predicable Your Payments
Unlike with a yearly lease, when you buy a home, you know your monthly payment amount for the loan’s life. When you sign a lease, you can see your rent increase every year in unpredictable ways.
Difficult to Move
When you buy a home, you create roots, and it becomes more difficult to free up and move. You must market your home and wait for a buyer to offer the right price before you cash out your home’s equity. Depending on the current housing market, you may end up waiting a while before you can move.
When you acquire a new home, you also acquire more cost. Now, you not only have homeowner’s insurance, but also policies, HOA fees, and property taxes to pay.
Home Value May Decrease
Whenever you buy a home, you take a risk that you have purchased it in a period that will be followed by an economic decline. A downward trend in your new home’s area may, in turn, negatively affect your home’s equity.
Rent vs. Buy with a Professional
We understand that buying a home isn’t an easy decision. We offer our expertise and experience to help you navigate your options and enjoy a smooth potential homebuying process. Contact The Mortgage Firm Gainesville to discuss these pros and cons more in-depth and discover which path is right for you!