When it comes to whether to rent or own a home, there are pros and cons on both sides that need to be considered. Owning a home has long been seen as the key to achieving financial security in America, while renting has often been viewed as throwing your money away. However, in the current economy, with housing prices rising steeply across the country, more and more people are choosing to rent rather than buy.
Take a look at some pros and cons of each option. You need to be informed to decide what is right for you.
Renting a Home
The advantages to renting a home include the following.
1. You can move whenever you want.
You are not tied down to the property, so you have the flexibility of moving if you change jobs or if you want to live closer to other family members.
2. You don’t have to worry about repairs.
If something breaks or needs repairs, the landlord’s responsibility is to take care of it. You do not have to shell out money for it.
3. You can move to a cheaper place if necessary.
If you lose your job or your roommate, you can find another place with lower rent.
The disadvantages to renting a home include the following.
1. You don’t build equity.
The money you spend on rent is gone forever, and you will never own the property you are living in.
2. Rent can be expensive and can increase.
Rents are high, especially in big cities. The more convenient and central the location is, the more expensive it gets. Rents also tend to keep increasing with high demand. If you miss a rent payment, you could be evicted.
3. You may have less space than you need.
Renting a one-bedroom apartment when you need a two-bedroom can be frustrating. It may be challenging to find a rental with the right size.
4. You cannot change much in the space.
You cannot make any permanent changes to your rented space without the landlord’s approval. That limits how you can make it feel like your own place.
5. There is no guarantee that you will be able to renew your lease.
If your landlord decides to sell the property or if the building is condemned, you may have to move suddenly and find a new place to live.
6. You are at the mercy of your landlord.
If your landlord is a jerk, you have no recourse but to put up with it. You can’t do anything about it if they don’t fix something broken in your apartment.
Buying a Home
The advantages of buying a home include the following:
1. You build equity.
Your home loan payments are investments that build your equity. The more time you spend in the same home, the more equity you will have in it. That can be a financial cushion in case of tough times or to help you buy another home later on.
2. You can customize your home to your liking.
If you don’t like the paint color or the house’s layout, you can change it to fit your needs. You have complete control over what happens to your home.
3. You can sell it at any time.
If you need to move or if you want to make a profit on your investment, you can sell your home at any time.
4. You can rent out rooms.
You can make money by renting out extra space. That can help pay for your monthly mortgage.
The disadvantages of buying a home include the following:
1. It can be expensive.
In addition to the home’s purchase price, you will need to pay for insurance and taxes. The costs can add up quickly.
2. You are responsible for all repairs and maintenance.
As the homeowner, you are responsible for continuous maintenance and repairs, big and small. That can be costly and time-consuming.
3. You are tied down to the property.
Your mortgage is a huge commitment. Even if you move, you still have to continue paying your monthly mortgage if you don’t want to lose what you have invested in the home. To recoup your investment, you will need to sell your home first, which can take time.
Make Your Decision
So, what’s the best option for you? It depends on your circumstances. If you’re not sure which is right for you, talk to a financial advisor or real estate agent who can help you weigh the pros and cons of each option. In case you have enough money now, it may be wise to buy before the prices go even higher. If you do not have enough money yet for a down payment, you can rent while saving up for it. Choose a place with a low rental and cut down on your other expenses. You will be ready to take the plunge when the time is right.