Renting vs Buying - Which is better?
Updated: Jul 7
Renting vs Buying - Which is better?
To Purchase or To Rent The debate about the value of owning a home compared to paying rent has been ongoing especially in the last decade. Depending on where you live, the price of a home can be ridiculous; at the same time, you have probably heard a million times that paying rent is like flushing your money down the toilet. You do well to know the benefits of purchasing, and the benefits of paying rent. In this article, you will see some of the pros and cons of each option. In this way, you will be able to figure out what is the best option for you and your situation. The Value of Paying Rent When you are a renter, you have a certain freedom that a homeowner does not possess. If you would like to move to a different country, all that you have to do is finish out your lease, and then you are free. You are not tied down, nor do you have to feel obligated to stay in your home for a certain amount of time. When you rent your home, you are also not responsible for repairs. While there are some home repairs that are affordable, most often they are quite expensive. The owner of the home is the person who is responsible for the upkeep and care of the home, so you do not have to worry about the fees of the home. Apart from that, you are generally not responsible for the yard either. This can be liberating. All you have to do is come home and let someone else take care of the home that you get to live in. In many states you can also receive a renter’s rebate at the end of the tax year for being a renter. The Benefits of Being a Homeowner When you are a homeowner, you are the master of your own domain. You do not have to get permission to change the color of your walls or make an addition to the home. Your home is yours, so you can do whatever you want to it. If you get sick of the way that your home looks, you can do a complete remodel. If you would like to add a part to your home, after you get the correct permits, you can do your home addition. When you own your home, you have invested in real estate, so, in most cases, when you take care of your home and make appropriate upgrades, your home will increase in value. Once you sell your home, you will be able to receive a great return on your investment. Apart from that, you will receive tax incentives for owning your home. The Negatives of Paying Rent Even though it can be liberating to rent your home, you also pay fees for that freedom. Since you are living in a home that is owned by someone else, this person has the right to raise your rent. That means that each year you will be paying more and more for the place that you call home. Apart from that, you have no rights to change the home without the owner's consent. If you do not like the color of the walls in the home, you have to get permission from the owner in order to change it. You are basically at the mercy of the owner when it comes to any addition or change to the home. There are some home owners who will not even allow renters to put holes in the walls. Apart from that, when you move out of your rented home, you receive nothing. There is no recompense when renting; your money is gone. Lastly, when you rent a home, you do not have security. If the homeowner decides to sell the home or rent it out to another person, you can lose your place of dwelling. The Negatives of Buying When you own a home, you are completely responsible for everything. This means that if a person somehow gets hurt on your property, you can be sued. You are also responsible for paying for the taxes and insurance on your home. Even if you were to pay off your entire mortgage, you can never get away from paying for taxes and home insurance. When you own your home, you are also tied down. You can not move whenever you want to because you have to find someone to buy your house first. When you have a mortgage, you can never miss a payment. This means that even if you have paid faithfully for years, if you are not able to make your payment for an amount of time, the bank can take possession of your home, and all of your investment will be gone. Lastly, when you purchase real estate, your hope is that you will get a good return when you sell the home, but the price of a home can decrease with neighborhood changes. Apart from that, the economy has a huge impact on home pricing as well. Even though a home seems to be a more permanent endeavor, it can be tricky. What to Do in 2020 2020 has proven to be a ruthless and difficult year for everyone, and many people have had economic setbacks. If you are one of the fortunate people who has the means to purchase a home in spite of the pandemic, it may be a great time for you to buy. It really all depends on where you are trying to purchase a home. There are some states that have been inundated with new homebuyers due to the pandemic, if that is the case in your state, it might not be the best time to buy. Before purchasing a home, you want to make sure that you have between 15-20 percent down, and you do not want your mortgage to be more than 30 percent of your household income. If the prices of homes in your state are affordable to your budget and you have found some great deals, there is no reason wait. To Buy or Not to Buy Statistics prove that buying a house can be more of a wealth building endeavor than renting. At the same time, many savvy millennials have put off investing in homes in favor of investing in the stock market, and they have found great success in that pursuit. Basically, if you are a person who is not ready to stay in one place and you want freedom to travel and move, you might do better renting. If you are a person who is ready to stay in one area, and you have the means to buy a home, purchasing may be right for you. Since each person’s situation is different, there is really no one who can tell you what to do. Keep your budget and lifestyle in mind, and try to count the cost before you make a decision that you will later regret.