Advantages & Disadvantages of Renting and Purchasing a Home
Every day, people purchase homes not worrying about the negative of positive effects on their financial savings and lifestyle. Also, overlooked is the fact that they would be better off with choosing renting as an option. To them, owning a home is ideal for tax deductions and can also serve as an investment. Similarly, people tend to rent homes owing to its flexibility and reduced responsibility. Whether you intend buying a home or renting one, if you do not make the right decision, it will definitely affect your savings and your lifestyle in subsequent years. Everyone wants to own a home but the truth remains that owning a house isn’t better than renting, neither is renting simpler than owing. However, it’s best you consider the numerous advantages and disadvantages of each in order to figure out the one that suits your current situation best.
Stability vs. Flexibility
What you stand to achieve from becoming a homeowner is belonging to a community and the pride of being a homeowner. Investing in real estate could sometimes be less profitable as it isn’t a liquefied asset. Getting a potential buyer to sell it off to when the market in down times can be difficult. Even when the market is up, the numerous transactions costs associated with the sell will certainly affect the amount of money you will make. Furthermore, it’s much more expensive relocating to some other place when you own a house. With renting, you are at liberty to relocate without penalties, though you could suddenly leave if the owner of the building you occupy decides to sell the property.
The common belief is that those who rent apartments end up spending a lot of money every month. Well, this ideology isn’t absolutely true. First, you require a place to live, and that means some money will be spent as well. Second despite the fact that you may not be building equity with the amount of money you spend monthly on rent payments, you certainly will not be building equity with the amount of money you will have to put into owning a house. Irrespective of how you do the math, the overall cost of owning a home is usually higher than that of renting one even if the monthly mortgage payment of owning a home is similar or lower than that of renting.
Below are some expenses that you will get to pay as a homeowner that you wouldn’t pay as a renter:
Despite the fact that there are lots advantages to owning a house, there are also responsibilities that come with owning a house such as repairs, insurance, taxes and other utilities. Weighing the advantages against the disadvantages will help assist you in deciding between buying vs. renting.
Ability to customize your home
When you own your house, you are at liberty of renovating it, remodeling it, and even expanding it to suit your needs. Such freedom isn’t given to rentals.
You will be able to stabilize your housing costs.
When you own your home, you will never have to worry about the landlord increasing your rent when your rent expires as you will have a fixed-rate mortgage. The only thing that could change are taxes as well as home owners insurance.
You can build home equity.
As you pay your mortgage, you also build some equity in your home. As time passes by, you will be able to make use of the equity you have built over the years to take out a line of credit for home improvements, clear some debts or even put it towards your future financial goals.
Eventually, you will have full ownership of the home.
Once you have been able to make all the mortgage payments, you will get to own the house. All you will be left with to pay is your taxes and insurance bills. But renters will keep paying their rent continuously every month.
A house is likely to appreciate
Depending on where your house is situated, current economic state and the structure of your home, its worth is likely to appreciate more as time goes by.
Homeownership provides positive tax advantages
When you own your home, you can painstakingly deduct mortgage interest and your local property taxes at tax time. This could save you a lot of money. Renters are not at liberty of getting any tax break.
The repairs and upkeep aren’t your problems
As a renter, your landlord is the one responsible for any upkeep in your apartment. You don’t have to handle a leaky sink and other repairs yourself.
You can easily relocate
Renters can easily relocate once their rent expires, unlike a homeowner who will have to look for someone to rent or buy their home to.
A house is likely to lose its value
Just as the value of a property could go up, its value can also depreciate, just as a good number of properties did during the economic meltdown in 2006. You will need to repay the amount of your mortgage if you intend selling your home, even if it worth less than the cost price in the current market.