Buying vs Renting? Seems to be the million dollar questions these with interest rates at a low and an increase in monthly rental payments where $1,150 for rent seems to be a thing of the past have lead many to the crossroad of buying a home sooner that they may have thought possible.
One of the biggest life changing decisions we can make as an adult is whether or not we are ready to take on the responsibility to own a home or continue renting. Buying and renting both come with an equal share of pro’s and con’s. Luckily there is no right or wrong answer the root questions is are you truly ready to take on the responsibility that comes with becoming a homeowner.
Renting and buying both present a number of pro’s and con’s but keep in mind your financial situation is the biggest factor involved.So before you jump into anyone decision ask yourself the following questions to gauge exactly where you stand not only financial but also emotionally when it comes to owning your own home.
Benefits of Renting
Renting allows for more flexibility and freedom especially if you happen to be on a month to month. Even if you are on a term lease of 12 months with your landlord there is still more room for negotiation if an event arises that causes you to break your lease early with little to no penalty. For instance you are being relocated by your job to a new location picking up and going where you are needed is a much easier process than if you owned your home. Leaving at a moments notice would not be possible and would depend on you selling your home.
This happens to be my favorite no maintenance whatsoever! The only maintenance you will be responsible for is making a call to your landlord to make them aware of the issue. There will be no unexpected expenses for and A/C that decided not to work or a leaking faucet.
While home prices have stabilized and mortgage rates have decreased there will never be a guarantee that your home will increase in value overtime. With renting these concerns will not cross your mind.
Unlike owning a home where homeowners insurance can be mandatory renters insurance is optional and solely up to the tenant if they would like to have the extra coverage in the event something where to happen.
Disadvantages of Renting
Unfortunately with renting there will not be an opportunity to build equity. Your housing payment provides you with a place to live; but your monthly rental payments are providing your landlord with an assist to sell in the future.
Increase in Rent Payments
There is no guarantee that your monthly rent payment one year will stay the same the next year. Unfortunately the reality is the landlord has a right to increase your payment as soon as the current lease comes to an end. That increase can be anywhere up to 5% to 10%.
Channeling your Inner Decorator
If you happen to be one that loves to paint and decorate you may be limited on what you can or cannot do to the home your renting without first consulting with the landlord. At the end of the day although you live in the home the landlord has the final say in what changes can be done.
Benefits of Owning your Own Home
One of the beautiful things about opening your own home is knowing that each one of your mortgage payments are building you equity. Historically home values can rise anywhere from 4% to 6% of course there is no guarantee that your home value will always go up; but there is security in knowing your payments will someday benefit you.
At the end of the year all the mortgage interest and property taxes you have paid on your home can be deduct on your income takes which reduces the final cost of owning your home. As a renter your housing expenses cannot be deducted.
When obtaining a loan for your home you went with a fixed mortgage your principal and interest payments will remain the same for the duration of the loan. There will be no surprise and the end of the 12 months with and increase in payments. However keep in mind that this does not apply to homeowners insurance and property taxes these do fluctuate year to year.
Sense of Community
Once you’ve committed yourself to owning a home you are more likely to become more involved within the community. There is more home ownership pride taken not only with your home but with the neighborhood. As a homeowner you also the freedom to not only decorate to your hearts content but upgrade however you’d like.
Disadvantages of Owning a Home
Honey Do List!
One of the responsibilities with owning your home that many do not realize until something in the house breaks is the new maintenance guy will be You! No more simple calls to the landlord or service company to come and repair the dryer that all of a sudden doesn’t want to work or toilet that keeps running. It means putting aside some extra money for these little unexpected repairs that will eventually come up throughout the year. There is a cost to maintaining your home in a great condition.
As a renter property taxes in not even on your radar there’s no need to even have it take up space in your mind its just not your concern; but as a homeowner be prepared every year to be responsible for paying your yearly property taxes which do go up from year to year.
Without a significant downpayment the chances of you obtaining the home of your dreams may be slim. There are also various cost that need to be taken into consideration when crunching your numbers such as
“How much is the closing cost going to be?”
“Will I have to get Homeowners Insurance?” If you have giving less than 20% down payment homeowners insurance will be mandatory. Whereas a Renters Insurance is recommended and at the sole discretion of the tenant on whether or not they would like to have it.
Luckily there is no right or wrong way. Whether you are currently renting or have already purchased your home both have an equal amount of pro’s and con’s. It all really depends on where you are at financial and if you are ready to take on the additional responsibilities that come with owning your own home.
If you are interested in learning more about buying or renting in your area call us today at:
(954) 303-3032 to speak to one of our experienced agents. To visit our home page click here.