Finding the perfect home is a big, personal decision. A home is where memories and families are made. But that’s not all. You also have to decide whether you want to own your home or rent. And in today’s market, there’s a lot to consider!
So, if you’re on the fence about buying or renting, here are the pros and cons for both. This article will help you make the decision that’s best for you.
Renting a House: The Advantages and Disadvantages
First, let’s consider why some people choose to rent.
Flexibility and Freedom
A lease is normally for six months or a year. There’s a lot of freedom in that. If you want to stay, you can, but if you’re not ready to settle down yet, you can move quite easily, without the responsibility of selling or renting your home.
The freedom of renting carries some restrictions though. You usually have to adhere to pet and housing policies. And at the end of the day, if you rent a home, it’s not your place. And even after paying rent, you can’t build equity.
Debt-free and Mortgage free
Most people need to finance their home with a very large loan – hundreds of thousands of dollars usually. But when you rent, you don’t need to finance. Instead of paying off debt, which can affect your ability to finance other purchases, you only have a monthly rent. It might look like the same thing: mortgage payment and monthly rental fee. But one is debt and the other isn’t.
If your monthly rent is less than mortgage payments, you can use this surplus for other investments. Some people choose to invest in higher education or certifications to advance their careers. Another perk to renting is that you can build up your credit history and improve your overall credit score, as opposed to incurring more debt.
Worry-free Repairs and Maintenance
If you’re not interested in flipping your house and doing home makeovers or repairment, a rental property can be perfect. Just make sure you know you’ll be happy there.
Additionally, when appliances, fixtures and other features need maintenance, the landlord is responsible. But if you don’t have a good landlord, you might deal with a neglected property, or have to invest your own money in it.
The Housing Market Doesn’t Affect You (Too Much)
If there’s a crash in the housing market, a homeowner may suffer when the value of his property falls.
But even if you’re not a homeowner, this can still impact you as a renter. For example, homeowners can pay the same mortgage rate for up to thirty years. But renters may find themselves paying higher rents if inflation goes up. And if housing costs drop, renting can become more expensive than owning. That’s because your landlord might need to make up for the loss in property value by increasing your rental payments.
As you can see, renting definitely has its advantages and disadvantages. So, what about the ins and outs of owning a house?
Why You Should Own Your Home
Sure, it’s a big investment, but there are a lot of pros that come with buying a home. Let’s look at why it’s a valuable investment.
Make Your Home Sweet Home
Now that you don’t have to answer to a landlord, you’re free to expand, customize and decorate exactly as you want. You could even make your home energy efficient to save on utility costs. If you’re planning on selling your house, you can modify it so it attracts potential buyers. Buying a house is a smart move if you have the income to pay the mortgage, and you know you’ll be living there for a while.
Your Mortgage Isn’t Just Debt – It’s an Investment
The idea of paying debt for up to thirty years can intimidate home owners. But if you have a fixed rate mortgage plan, you can be assured that you will always pay the same amount even if inflation goes up.
Additionally, your monthly payments aren’t just a way to pay off debt. At the beginning, you will mostly pay interest fees and taxes. But over the years, you’ll build equity and acquire a wonderful asset. Plus, the interest payments are tax deductible, and so are any eligible expenses you make on the house. But if you rent, the money goes straight to your landlord, and unfortunately, you can’t build equity that way.
Monetizing Your Home
Many homeowners look at their home as something they can cash in on. And you don’t have to sell your house if you want to make money with it. As a homeowner, you can rent out rooms, garden space and even parking spots.
Owning Your Home is like a Long Term Relationship
Making money from your home shouldn’t be the only motivation to owning it. It’s important to love your home, because if you’re unable to sell it or monetize it, you’ll need to stay.
It’s like being in a long-term relationship, and you have to commit during both the good and bad times.
As a homeowner, you’re responsible for mortgage payments, property taxes, bills and maintenance. It’s true that fixed mortgage rates ensure that your monthly payments won’t rise with inflation. But if interest rates do rise, your house might not be worth what you initially paid, and your remaining mortgage payments might be more than your house is actually worth.
It might take a long time for the value of your house to go back up. So, it’s important to both love your home and be financially stable. This way, you can ride out any storms in the housing market and always have a place to call home.
Renting or buying a house has many factors to consider. If you love your house, and you’re committed to staying for a while, you’ll end up with a valuable asset. Plus, you’ll have something you invested a lot in. And not just financially!
With a home, you build memories, families and stories. And that’s something no one can ever take away from you.