Do you now feel like it’s time to buy a home? This would depend on many factors, but one huge consideration would be your financial stability. It’s normal to want to live the American dream but you should weigh several things before you decide whether to rent or to buy.
Both renting and buying have their pros and cons. Renting would be the best choice for people who want to save or move often while owning a home is for those who covet a sense of stability and are financially stable in every way.
Buy a home for the right reasons, not because you are peer-pressured, thinking that you’re just throwing your money for the rent, or miscalculating your financial capability. Truth is, you’re not wasting your money paying for rent. Whether you rent or buy a house, you will always have to cash out for living expenses.
First off, learn about the advantages and disadvantages of both renting and buying, then know the steps toward making the right decision whether to request home mortgage loans or continue renting.
Pros and Cons of Renting
When you rent, you can expect to pay a fixed amount every month. Your rent will not fluctuate—it will depend on the price when you started your lease—unless your lease is now up for renewal. Most of the time, the price of your rent will stay the same throughout your lease contract.
But should your landlord spike up the rent, you will be given a notice, so nevertheless, you can still budget for the raise and not get caught unaware.
What attracts everyone the most toward renting is its much less upfront cost. Most of the time, renters will require a security deposit but it’s already usually the equivalent of one month’s rent. If ever they move within that month, theoretically, their deposit is returned.
Any time your lease ends, you can always move without having to pay any penalty. This can be very beneficial when you’re constantly on the move or are yet testing the waters to determine which city to settle down in.
Merely renting, you practically have the freedom to live anywhere you want and even access expensive amenities that you otherwise have to pay much when you’re a homeowner. These may be luxuries like a gym, pool, and more.
For the most part, you pay less when you rent. You don’t pay for repairs, maintenance, or real estate taxes. You also get to pay lower insurance and utility costs.
But even when renting means fewer expenses, it still comes with disadvantages. Rent could spike up any time although your landlord would give notice. Your landlord may also abruptly decide to sell or stop renting.
Being free to move anytime, the downside is that you don’t feel the sense of permanence or stability. You also don’t have the ability to customize your space nor build equity.
Pros and Cons of Buying a Home
Aside from getting into the bandwagon of living the American dream, you get to build equity and have the opportunity to deduct your taxes. Home equity refers to the balance you get when you divide the current mortgage amount by the market value of your home. Many Americans build wealth through homeownership equity.
A home is an asset with a value that most likely appreciates over time, although this depends on the supply and demand. When the market value of your home increases, you also get to increase your equity.
Another benefit of owning a home includes reaping tax benefits. This means you get to pay less toward taxes as long as you itemize your tax deductions. Unlike renting, homeownership also means being more able to customize your living space.
Finally, owning a home gives you that sense of stability. You live the American dream, get that ownership pride, and feel a sense of belonging in the community.
For many Americans, owning a home is the ultimate dream come true, but just like any other good thing, it comes with disadvantages.
The first issue new homeowners usually notice is their being responsible for repairs and maintenance, which can really be time- and energy-consuming. Also, you wouldn’t know if the value of your would increase or decrease. There’s no way of knowing whether the new tax laws might hinder your tax benefits.
To Rent or to Buy?
This depends on various factors. How long would you want to live in the same place? If it’s five years or more, then you may want to consider buying. Factor in your financial capability as well as you’ll have to commit to the mortgage, maintenance, or repair costs, etc. For the nomadic or restless type, renting might be your best choice.