Deciding whether to buy a home or rent is a big decision that should be carefully done because it affects your pocket. Moreover, besides affecting the size of your pocket, it determines the life you live and the amount of savings you will have ten years down the line. Each day the number of people purchasing houses is increasing at an increasing rate when they would be better renting because they believe they must be rooted in a particular community and view homeownership as saving and a reason to pay fewer taxes.
On the other hand, people live in rented apartments because it’s flexible, and it comes with fewer responsibilities, although owning a house makes one accumulate significant net worth. When most people are asked what option they would prefer, a large percentage leans towards purchasing a home than renting. It’s advantageous to many parties, including home improvement businesses, property buyer agents, and mortgage lenders. Therefore, the message most people get is that to be happy; you have to own a home. Indeed, it is the dream of every American.
However, homeownership is not necessarily better than renting, and renting isn’t also easier than having your own home. To know which option would work better for you, you have to consider the pros and cons, and Movoto.com can assist you in getting the right property.
When renting a house, you will not be penalized should you decide to move out once your lease period elapses. It also implies you may be forced to relocate suddenly if the owner of the house decides to sell it or transform the property into something else like a guest house or even worse increase the rent to amounts you cannot afford to pay.
Most people believe that renting is throwing away your resources each month. This is a myth, and it’s not true you are throwing away your resources because you want a place to live, and irrespective of whether you are renting or buying a home, it costs money.
Secondly, although when you rent, you don’t build equity with the rent you pay every month; ideally, you also won’t build equity with the money you are using to buy a house.
Renting means you are aware of how you are required to pay each month. However, when you own a house, you will pay regular bills, monthly mortgage repayments, and an extra $13000 to have the roof fixed. These repairs may not be covered by home insurance. When you rent, you never have to incur the additional costs of fixing a roof. It is possible to predict expenses related to your home.
On the contrary, if you are renting an apartment, you cannot predict when the rent will rise, provided you don’t live in a place with rent control policies. In most desirable suburbs, increases in rent are always sharp. This is where owning becomes better because your monthly loan repayments won’t increase if you get a fixed-rate mortgage loan (even though insurance premiums and property taxes could increase).
Owning a home has numerous advantages: security and stability, sense of belonging, and equity building, among others. However, if you are the nomadic type, it is not the right choice for you. Real estate is a fantastic asset, and you may not sell your house whenever you desire to e.g., when there is low demand in the market. Also, even when there is a boom, there are several costs associated with selling the property. Thinking of relocating is a complicated and expensive decision when you are a homeowner.
Overall renting is cheaper than owning even when the amount you pay to the bank as monthly loan repayment may be equal to or lower than the rent you would pay. As a homeowner, you will cater to the following:
- Earthquake insurance and flood insurance (although not in all areas).
- Pool cleaning
- Homeowners insurance
- Trimming of trees
- Pest control
- Maintenance and repairs
- Sewer and water service
- Garbage pickup
- Property taxes
When you rent, you won’t be required to pay such costs, which saves you money. The most significant expense is mortgage interest, which has the potential of eating into your entire monthly income. Moreover, even when you want to sell the house, you may need to renovate it, and that does not necessarily increase the value of the home. Most of the time, renovations only give back the amount you spent on them and not an additional which you could count as profit.
People view things differently. As a result, one person sees owning a home as better than renting while another sees renting as the best option. The two options have advantages and disadvantages, and it is vital to analyze them in detail before you conclude.