Should You Rent Or Buy Your Home?
One thing we all have in common is the need for a roof over our heads. Yet many people debate whether they should rent or buy that roof. How do you know which is right for you?
On one hand, home ownership is a big commitment that can be very expensive. On the other hand, ownership is also an investment that can be less expensive than renting over the long term. So how do you decide?
Here are the advantages of each.
Advantages Of Renting
Depending on your lease, you’re not tied to your residence for more than a year or two.
But when you buy a home, you’ll first need to sell it or find a tenant before you can move.
When you rent, maintenance issues such as fixing a broken pipe or clogged drain is the landlord’s responsibility. He’ll not only get somebody to fix it, but he’ll also pay the bill.
When you buy a home, keeping everything in good repair comes out of your own wallet.
Move In Faster
Renters can move in soon after their application is approved.
Buyers need to find the right home, negotiate the offer, get financing, and transfer ownership of the property. All of this takes considerably more time.
Move In Cheaper
Renting usually doesn’t involve more than two months’ rent and a security deposit to move in.
On the other hand, buying a home not only involves a big down payment (at least 20% in most cases), but you also pay thousands of dollars in fees and costs associated with getting a mortgage. These include application, origination, and title insurance fees just to name a few.
Advantages Of Buying
Your Own Place
For most, the main reason we want to buy is so that we’ll have a place to call our very own. With home ownership, you’re no longer paying off the landlord’s mortgage. Having your name on the deed is a great feeling for most of us.
As you pay off your mortgage and as home values rise, you build equity in your home. You can think of equity as a savings account, cashing out if you sell your home and using the money as a down payment for another house. Or you can borrow from your equity through a home equity loan or a home equity line of credit.
Mortgage interest, property taxes, and closing costs are deductible from your federal income taxes. This is another big reason why home ownership is appealing for many.
We’ve talked about the easiest way to beat inflation before. But here’s another, more indirect way.
As the cost of living rises, rent increases along with it. But if you apply for a fixed-rate mortgage, your payments stay the same for as long as you live in the home. So the longer you live there, the greater this benefit becomes.
What other factors are there to consider? Do you currently rent or buy the home you live in?