Whether to buy or rent or own the house that you live in is a significant decision. It affects your savings and the amount of money that you are left with at the end of every month, and also your lifestyle. Often, people who buy homes wish to put down roots. On the other hand, those who rent long for the minimal responsibility and flexibility that it offers. Here are the pros and cons of each.
Buying a house is one of the best investments that you can ever make. Real estate prices always rise. Therefore, there’s a guarantee that you’ll sell the property at a higher price whenever you find yourself in a difficult financial situation. Typically, homes increase in value, and owning one enables you to build equity besides providing an egg nest for the future.
The most significant benefit of owning a home is that you have full rights over it. Homeownership also brings intangible benefits, including a sense of stability and belonging to the community that you live in, and the pride of ownership. Even though the overall cost of owning a home is considerably higher than renting, homeownership has a ton of advantages. With your own home, you are guaranteed more privacy than you can have when living on rented property.
Unlike renters, property owners tend to have predictable costs since whatever they pay is often based on fixed-rate mortgages. Likewise, the property tax and interest portion of your monthly mortgage payment are considered a tax deduction. Making modifications to a home that you own is easy, provided that there aren’t any restrictive covenants in the property’s deed of Homeowner Association (HOA) restrictions. Moreover, there are dozens of affordable homeownership options, such as purchasing lower-cost manufactured homes. Often, renters are forced to contend with what their landlords offer them, especially those whose finances are restricted.
When you rent a home, it means that you can only live there for the period stipulated in the lease agreement. Therefore, the landlord retains his/her property ownership rights. As a renter, you can move from the house without incurring any penalty. Nonetheless, you might be forced to move out if the landlord decides to either sell the house or use it for other purposes. In case rent is increased to a figure that you cannot afford, you might also be forced to move out.
Renting a house means you won’t have to worry about making a significant deposit and subsequent mortgage payments before moving into the property. However, the fact that you’ll be paying rent every month means that you won’t be building any equity. Likewise, you will be facing uncertainty whenever the tenancy is up for renewal due to unpredictable rent increases. There’s never a guarantee that your lease will get renewed. In some places, monthly rent is more than monthly mortgage payments. If you live in such an area, it makes sense to buy rather than rent a house.