There are many people who are unable to decide whether they should buy or rent a home. Both renting and buying a home has their benefits, therefore it is important that you compare the benefits and drawback of buying and renting a home.
Renting a home is usually cheaper than buying one. When you rent a property, you don’t have to pay your monthly mortgage dues and you don’t incur expenses of repairing the appliances and home. However, the rent that you pay could increase from time to time. When you have taken a mortgage at a fixed rate of interest, your mortgage payment is fixed and will not increase.
When you apply to get home loans, you are required to complete a lot of paperwork. When signing a mortgage contract, it is important that you understand the terms of the contract. Most contracts are for a period of 30 years and if the terms are not in your favor, repaying the mortgage could be a big headache. One of the most important reasons why people default on their mortgage loans is because borrowers don’t understand the terms of the mortgage. On the other hand, terms the of the rental agreement are easy to understand.
It would be nice if you need not write a rent check each month. Nothing can make you feel safer than owning a house, provided that buying a home will not result in financial problems of its own. Every year, a new wave of first time home buyers hits the trail in search of their humble abode. There are pros and cons to home buying. Certainly, there is the matter of timing and related financing programs.
Let us discuss the key monetary costs associated with home buying to stack up against your monthly rent check. Here are points to consider when deciding on buying versus renting.
Owning a home means gaining equity. If the owner keeps the house long enough for it to rise above the initial cost of its purchase, then that is profit. This is one of the most essential and superb matters associated with home ownership.
When you buy a home, it brings a sense of accomplishment and pride. It is also a chance to express your style and personal taste. You can enjoy the freedom with home ownership. Buying a home also lets you have insight as a part of a permanent community. On the other hand, in a rented apartment or home, one might feel temporary and less involved.
Now, let us discuss the financial considerations of buying versus renting.
When buying a home, with your every monthly payment, you are putting money into savings. On the contrary, when you rent a home, you have to give money to the landlord and it is an expense. Every time you pay a mortgage, a percentage goes toward your equity. Indeed, this is similar to having money in your bank account, which you can draw upon later when needed. Every year, rental rates increase and the principal on your mortgage decreases with every monthly payment. Further, the housing market continues to grow and hence the property value of homes.
Owning a home also comes with some interesting tax benefits. Each interest payment made is accounted in your tax deduction later on. The same is not true with your rental payment. With all the above points, buying a home certainly sounds great! However, it is not for everyone. Every coin has 2 sides and we have to think about every aspect before getting into home ownership. Of course, we don’t want it to be our worst nightmare. When it comes to buying a home, it is a complicated, time-consuming and of course, costly endeavor. Let us think about the responsibilities involved in buying vs. renting.
Buying a home requires an investment of time. As a tenant, you can enjoy more freedom to move around the country. As a homeowner, you have to think about and manage the leaking pipes, pruning hedges, mowing lawns, and lots more to keep all things running smoothly.
When it comes to buying a home, many small home improvements can keep adding up as expenses. Sometimes, you might need to pay for utilities that would be covered in a rental agreement. When you rent a home and find that you are not happy with the locality or your new neighborhood, then you can find a place and move somewhere else. You can make a decision to shift somewhere else instantly depending upon your rental agreement. Imagine a similar case with home buying. You cannot sell out your home instantly. You have to wait till you get a good deal for your home, along with the expenses invested in it, at least be in an equitable position when you sell the house.
Weighing the advantages and disadvantages of buying and renting a home can be challenging. Definitely, the above considerations may vary from person to person. You have to think about your financial condition and think about the effects of the decision you make in the future. Do not forget to take responsibilities into account while counting benefits of any aspect. This will definitely help you make a smart decision that will give you the best return on your investment.