Buying vs Renting - Which is Best for Your Situation?
Whether you’ve rented for years or just relocated to a new area, you may be asking yourself, “Should I buy a house or rent?” There are a lot of factors to consider when determining rent vs buy, and we’ll go through them one at a time. Read on to discover what the best choice is for you.
Owning a Home - Pros & Cons
No matter what your age or circumstances, there are a lot of different reasons why owning a home could be the best thing for you or a move you shouldn’t make. We will explain all the pros and cons of owning a home and help you determine if you should buy a house.
This is a big one in the rent vs buy debate. In fact, as a homeowner, you can deduct the interest you pay on your primary residence for up to $750,000 of mortgage debt. Owning a home is one of the consumer’s most significant ways to save their money rather than giving it up in taxes. When comparing mortgage vs rent, taking advantage of tax savings tops the list.
As long as you get a fixed rate mortgage, your principal and interest will be the same over the life of your loan. That makes it much easier for you to budget and predict what your monthly expenses will be. Compare that to dreading yearly rent hikes that you have no control over, this is a big point in another debate of mortgage vs rent.
Pride of Ownership
One of the best things about buying in the rent vs buy debate is the pride you feel when you’re a homeowner. Not only can you make any changes and improvements you want to, there’s no landlord to ask if it’s ok to paint a wall or hang pictures. Plus, you’ll be the one reaping the rewards when the property is going up in value.
When you look at the cons, one of the first things you should consider is the home ownership costs that you wouldn’t have as a renter. Depending upon the condition of the house, the extra expenses can be considerable which may push you more towards the renting side of the equation. Newer homes have far less maintenance, while older homes can be a real money pit.
Longer To-Do List
If you don’t like to tinker around the house, work in the yard, or fix what’s broken, you may want to keep on renting. When you’re the owner, there’s no landlord to call when the garbage disposal breaks, drains clogs, or roof leaks. Now, that’s your job, and while there are ways to ensure your home looks good for years to come with some basic home care, the actual care part falls on you.
Harder to Relocate
Owning a home can be a massive con if you must relocate every year or two for your job. In fact, it wouldn’t be worth it since there are initial home ownership costs and expenses in purchasing a home like closing costs and commissions. It just doesn’t make financial sense if you aren’t in one place for at least 3 years. If you move around a lot - keep renting.
When you own a home there are homeownership costs that you don’t have as a renter and some can be quite substantial. For example, new roofs can run anywhere from $3,000 to $15,000 and up. Plumbing and electrical are also costly. If you’re out shopping for a house, it’s smart to take a close look to see what maintenance might be due within the next few years. You don’t want to be surprised down the road. Additionally, if you plan on buying an older home, you may also want to consider how you will fund home upgrades like new countertops or new home automation gadgets.
Renting a Home - Pros & Cons
Renting a home can be the perfect solution in certain circumstances and a bad financial choice in others. Let’s look at the renting side of the rent vs buy debate.
No Big Commitment
One of the best things about renting is you’re not committed to a specific location. For example, if you’re new in town renting for 6 months is the way to go. That way you can check out the area and scope out a good neighborhood to see where you’d like to potentially buy.
Can Be Less Expensive
If you want to keep your overhead super low, you can rent a smaller place - even if it’s just for a little while. During that time you can plan for the future, scope out your options, and save up for a down payment which is one of the home ownership costs associated with buying a new home.
Easier to Relocate
If your job requires you to move quite a bit, or if you’re in the armed forces and you’re ordered to relocate and you’re renting - the move is simple. Selling a home can take months and getting it ready to sell is almost always a big project.
A big con about renting a home is that your neighbors might be too close for comfort. If having another family on the other side of the wall isn’t your cup of tea, start saving for a down payment so you can buy your own home and get the privacy you desire.
What if you have a dog that’s a German Shepard or Doberman? You might have trouble finding a nice place to rent. Even if your dog isn’t on a “restricted list,” finding a good rental with pets can be a problem. It likely won’t be a problem if you’re a homeowner, plus you can find a house with a big yard for them to play in.
When you rent you’re always at the mercy of the landlord and whether they decide to raise the rent. And depending upon where you live, if the rental market is hot, your budget could be stretched more than is comfortable for you. When you buy a home, you have a better sense of how much house you can afford.
We hope this comparison of buying vs renting has helped you in making your decision. Want to take a deeper dive? Read about more advantages of being a homeowner!