Renting vs Buying a house pros and cons
![Buying or Renting… Either way, your paying a mortgage.](https://i0.wp.com/chelsierunnings.com/wp-content/uploads/2018/04/door.jpg?fit=600%2C800&ssl=1)
Buying or Renting… Either way, you’re paying a mortgage.
Buying or renting – which route is right for you? The answer depends on many factors like your financial situation, future plans, and lifestyle. The choice between buying a home and renting one is among the biggest financial decisions that many will make. There are arguments both for buying and for continuing to rent, depending on a potential homeowner’s individual circumstances.
Calculating the Cost:
the biggest mistake future homebuyers make is comparing a month’s rent to a month’s mortgage payment. Many people don’t have all the numbers. Here are some expenses you can expect as a homeowner that you don’t have to pay as a renter:
- property taxes
- trash pickup
- water and sewer service
- repairs and maintenance
- pest control
- tree trimming
- homeowners insurance
- pool cleaning (if you have one)
- lender-required flood insurance, in some areas
- earthquake insurance, in some areas
If you rent a home, your monthly costs are generally fixed for the term of the lease. Your monthly rent may or may not include utilities such as electric, gas, cable or internet. Most leases require the first month’s rent, last month’s rent and a security deposit equal to one month’s rent in advance. One of the top benefits is protecting yourself from rising rents, by locking in your housing cost for the life of your mortgage. Landlords can in most places increase the rent as much as they like when the lease ends or sell the property you’re renting, so you may have to move a few times.
Historically, the choice of renting or buying a home has been a tough decision. People wonder if purchasing a home is the best option for them. Homeownership can provide your family with an opportunity to build long-term financial security and independence.
Advantages of Buying a House
- When you pay your mortgage, you work toward full ownership. Every payment brings you closer to owning the house. Creating Equity. When you pay your rent, that money is gone, paying someone else’s mortgage or putting money in their pocket.
- You can cash in on equity and appreciation. Your home will most likely increase in value over time depending on the market and how well you take care of your home. What you buy for $200,000 today could sell for $260,000 down the road.
- You have tax advantages. If you’re paying off a mortgage, you’ll get to count your mortgage interest as a deduction when you file your tax return. Property taxes are also tax deductible!
- You have the freedom to make your house how you want it to be. As the owner of your house, you can do whatever you’d like to it. No landlord can stop you.
- It’s yours! You have a house! You have the satisfaction of knowing you made the American Dream your reality.
Disadvantages of Buying a House
- It’s more difficult to travel and relocate. Selling your house or renting it out isn’t as easy as getting out of your lease.
- You have more expenses.
- As a homeowner, you’re responsible for the upkeep of your home. Who’s going to fix the broken water heater? That responsibility now falls on your shoulders.
What’s the Big Picture?
Should you Rent or Should you Buy?
While many factors play in role in your decision to rent or purchase, with today’s mortgage rates remaining near historic lows this has an important and direct effect on how much you can afford. After years of record-low interest rates, the Fed is making some noticeable increases: The rate for a 30-year fixed mortgage broke the 4% mark last year.
The longer buyers wait, the more expensive it will get to buy—not just because of home prices, but because of inflationary pressure. In other words, now might be the time to buy.
Studies have shown that a homeowner’s net worth is 44x greater than that of a renter. “If you’re not prioritizing homeownership, you’re making a costly mistake”, says co-founder of AE Wealth Management and self-made millionaire David Bach.
Before you start house hunting, you need to get a firm handle on your finances. What do you earn? What do you spend? How much do you have in savings?
Don’t get caught in the trap that so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Let’s get together to determine if you can qualify for a mortgage now!
Check out this Rent vs. Buy Calculator:
https://www.realtor.com/mortgage/tools/rent-or-buy-calculator/
Renting vs Buying a house pros and cons. Why not make it yours? The decision to own versus rent is very much a lifestyle decision as it is an economic decision.