Renting, Building, or Buying a Home? Here’s What You Need to Know
There is no definite answer as to whether renting or owning a home is better. The answer depends on your own personal situation, that is your finances, lifestyle and personal goals. You need to weigh out the benefits and the costs of each based on your income and savings. Here are some outlined points that may help you decide what works for you.
1. No maintenance cost or repair bills: This means that when you rent a property, your landlord assumes full responsibility for all maintenance and repairs. If your roof starts to leak, you call the landlord. He or she is required to fix or replace it. Home owners on the other hand, are responsible for all home repairs, maintenance and renovation costs. The nature of the task and whether multiple jobs pop up at the same time, it can get quite pricey.
2. Flexibility as to where to live: Renters can live practically anywhere, while home owners are restricted to areas where they can afford to buy. Although rents can be high in areas where home values are also high, renters are more apt to find an affordable monthly payment than home buyers.
3. Few concerns about decreasing property value: Property value goes up and down. While this may affect home owners in a big way, it affects renters substantially less. Your home value can impact the amount of property taxes you pay and the amount of your mortgage.
4. Flexibility to downsize: Renters have the option to downsize to a more affordable living space at the end of the lease. This kind of flexibility is especially important for retirees who want a less costly, smaller alternative that matches their budget. It’s much more difficult to break free of an expensive house because of fees involved with buying and selling a home. Also, if a home owner has invested a significant amount of money in renovations, the selling price might not cover these costs, leaving them unable to afford to sell and move.
5. Access to amenities: Another financial benefit of renting is having access to amenities that would otherwise be an enormous expense. Luxuries such as an in-ground pool or a fitness center come standard at many midscale to upscale apartment complex with no additional charge to tenants. If a home owner wanted to have access to those amenities, they would likely have to spend a huge sum of money for the installation and maintenance
6. Fixed rent amount: The amount you pay for rent is fixed for the span of the lease agreement. While landlords can raise the rent with notice, you can budget more efficiently because you know the amount of rent you are required to pay. The same applies to home owners with fixed rate mortgages, which also allow for efficient budgeting. However, adjustable rate mortgages can fluctuate, often resulting in rising mortgage payments due to higher interest charges. Property taxes are another variable that can increase costs for home owners but don’t affect renters.
In conclusion, owning a home can be beneficial for home owners over the long run, due to the amount of equity they acquire in their home. Renters have nothing tangible to show for years of rental payments. However, for those who want to avoid the hassles associated with home ownership, the costs of upkeep and property taxes, renting might be a better option. You can also consider rent to own options to make the best of both worlds. You can read more about it here.