When deciding whether to rent or own a home, it’s important to keep in mind that each comes with its own sets of pros and cons. There’s no one-size-fits-all answer that works for everyone when it comes to deciding which type of living situation will suit you best. To figure out which option would be the most beneficial for you, follow the advice in this article to make the most informed decision possible about renting vs owning your home.
Renting vs. Owning Your Home
PROS & CONS OF RENTING:
When it comes to renting a home, there are more pros than cons.
One of these is that renting allows you to live in an area that may be outside your price range if you were to buy. For example, it might be cheaper to rent rather than buy where you work.
Another positive aspect of renting is flexibility: You can leave at any time without having to deal with selling. If you’re moving because of job changes or another reason, renting is much easier. You don’t have to worry about finding someone who wants to buy your home and meet closing costs and commissions; instead, all you need to do is pay for one month’s rent and security deposit when leaving and find new tenants.
Of course, owning has its own perks. Many homeowners say they like being able to make repairs and modifications to their house as needed, such as installing upgrades or painting rooms a different color. With renting, you can only make certain kinds of improvements unless your landlord gives permission.
PROS & CONS OF OWNING:
If owning your own home seems more appealing to you, consider these pros and cons of home ownership:
There are many financial advantages to buying a home. First and foremost, homes are an excellent investment. Homes can rise in value over time—and if homeowners are willing to put money into their properties (for example, by renovating) they can increase in value much faster than other investments such as stocks and bonds.
When it comes to taxes, home ownership can be beneficial. When filing your taxes each year homeowners receive benefits on their mortgages and are able to deduct certain expenses such as property taxes. With renting, most of these tax deductions aren’t available. If you rent a place that is owned by someone else (known as being a tenant in common) you will still have to pay property taxes, but not all states allow tenants in common to claim deductions on rental income. For many people though, buying and owning a home just makes sense because they can build equity over time—something that isn’t possible when renting.
The truth is there are pros and cons no matter what situation you choose—owning a home or renting. What matters more than deciding between renting and owning, however, is making sure you’re getting into either scenario for the right reasons. You shouldn’t own a home simply because everyone says it’s the American dream, for example; instead, consider whether purchasing a house fits into your long-term financial goals.
Factors to Consider When Choosing Between Renting & Owning
Before deciding between renting and buying, there are several factors to consider.
For some people, purchasing their own home can be an ideal way to save money and create wealth. But for others—and depending on where they live—renting may make more sense. When it comes to purchasing a new home , here are five questions to ask yourself:
How long do I plan on staying in my area?
If you expect to relocate soon, buying your own home might not be worth it.
What are my finances like?
Can I afford to make mortgage payments on top of other monthly expenses?
How long will it take me to save up for a down payment and closing costs?
Buying your own home can be expensive: You’ll likely need at least 5% down, plus money for closing costs . If it’s going to take several years before you can save up enough cash, renting might be your best option.
Am I financially ready for homeownership? One way to know if you’re ready to buy is by answering two simple questions:
1) Do I have high enough credit scores to qualify for an affordable mortgage? And, 2) Can I afford my monthly mortgage payments? If your answer to both of these questions is yes, then buying might be a good option.
What are market conditions like in my area?
A key factor when deciding between renting and buying is how much it costs to rent a property versus how much it costs to purchase one (or more) homes in your area.