Deciding whether to buy or rent a home can be pretty frustrating, especially for a prospective homeowner. Renting or buying is not an easy decision to make. Buying or renting a house will always give you a sense of ownership. However, you will have to consider certain factors before deciding on a long-term investment, such as this one. Financial advisors and experienced realtors can help you narrow down your priorities on renting vs. buying a home.
Buying a Home
Buying a home can be a worthwhile investment. However, it comes with its pros and cons.
Buying a home comes with a great sense of stability and pride of ownership. Your family will have a stable lifestyle; hence they will not have to worry about moving around looking for a house to rent after a lease is up.
According to the National Institute of Health, owning a home offers children an ample and conducive environment for growth and development. Unlike renting, where landlords mostly dictate the payment plan, buying gives you a stable house payment plan, knowing how much you will have to spend monthly. In addition, you are in charge of what you wish to plan and do with your home.
Home value tends to appreciate. Depending on the area you buy your home, your home may stand to appreciate more rapidly, such as here in South Florida.
Owning a home is a long-term investment, and it is a tangible investment for your family. Homeownership also allows you to take advantage of tax benefits.
Mobility and Property Taxes
It will be more challenging to accept a new job offering if you own a home, as this means you may need to move to another city or town. And property taxes can be costly, in some cases, way over the amount of your mortgage payment.
Maintenance and HOAs Fees
Buying a home comes with the requirement of a maintenance fee, including trash pick-up, repairs, and other amenities. In addition, natural calamities like floods and earthquakes will require you to take insurance coverage to cater for such events.
On the other hand, the location where you have bought a house might have an association that you will be required to remit a monthly payment. The down payment needed to seal the deal on buying a house can be hard to pull together. It can include costs for mortgage insurance, home inspection, title search, and property taxes. Note that the location you will choose will determine the home value as an investment asset.
Renting a Home
Mobility and Maintenance
People avoid expenses, and renting a house tends to relieve you of expenses such as plumbing and repairs. The landlord takes care of such house maintenance costs for you. Renting a home gives you the freedom to move around. You will not be limited to living in a specific area. Renting is favored when it comes to career considerations. When the terms and conditions of the lease agreement change not in your favor, you can decide to move and look elsewhere that offers a favorable lease agreement.
No Property Tax
Renting a home gives you a free pass not to pay property tax. You do not own the house, so you will only be subject to other expenses such as electricity and water bills. However, some homeowners factor in the property tax in your monthly rental fee. If you are not comfortable with such an arrangement, you can decide to forfeit the lease and look to rent elsewhere.
A rental house does not give you much ownership over the place as you can face eviction for failure to pay the rent, and the landlord can choose to increase the rent anytime. Besides, you cannot modify the house without the landlord’s consent.
No Benefits and Equity
Despite the number of years you’ve stayed in the house, you don’t get any tax benefits. Your monthly rent contributes towards the landlord’s wealth; hence no equity for you whatsoever.
The Bottom Line
Renting vs. buying a house are both big decisions to make. Factors such as your career growth, family model, and preferred location are determinants in deciding whether to rent or buy. However, some areas offer affordable rents compared to buying a house.
On the flip side, buying a home is a worthy investment and an accomplishment. So go with the option that works best for you, depending on the phase of life you are in.
Need some guidance on renting vs. buying? Seek advice from real estate experts Bello Real Estate to help you decide whether to rent or buy a house.