Renting vs. Buying a Home

Deciding where you’re going to live is a big step in life, and the decision of renting or buying is a choice that most of us will eventually have to make. The first thing you should consider is what will financially work best for you. Before you commit to anything you should consider all options with due diligence. But, making such a huge decision on your own can be stressful, so that’s why we’ve put together this comprehensive list of pros and cons to inform you before you decide to rent or buy a home.

Renting
Renting a home can definitely provide some great benefits for you depending on your particular living needs. Here is some of the benefits and disadvantage of renting a home.

Pros:
• Since you’re not buying, renting allows you to pick up and go wherever want easier than if you bought your home. If you see yourself on the go or moving within the next three years, then renting might seem pretty appealing.
• By paying your rent on time each month, you are helping to build your credit history, so you can eventually buy a home.
• If you are already dealing with debt or loans, renting will be a great alternative to having a mortgage you pay for each month.
• Being the tenant, you don’t have to worry about unexpected housing issues costing you money. A good landlord will always take care of the housing issues and expenses that occur unexpectedly.
• Renting, in the short run, can be cheaper than buying and maintaining a home.

Cons:
• Since you are renting, you don’t get to build equity. Essentially, you won’t see any return on rental housing since you don’t own the property.
• Because you are renting you might find some trouble renovating or decorating your home. Some landlords may be against any major renovations.
• Unlike buying, when you rent you don’t receive any tax benefits.
• Depending on your location and rental laws, your landlord may be able to raise the rent at their own discretion.
• The major drawback for renting is that you don’t actually own your home. Yes, you pay to live there, but you’re still living under someone else’s roof and rules.

Buying
When buying a home there are many more factors to consider than renting. The upside to this is that it will be YOUR home, which can ultimately become a good investment for the future.

Pros:
• As mentioned before, when you decide to buy your home, you are building equity over time. When you begin to pay down your mortgage or add value to your home, you are increasing your investment should you one day decide to sell.
• Unlike rental properties, owning your home means you are eligible for tax benefits. This can come in the form of deductions and/or exemptions, depending on the tax laws in your state of residence.
• The biggest pro on this list is definitely the fact that you are the owner of your home. With this you can do whatever you like to your house. Want to tear down that wall, do it! Want to renovate the kitchen, do it! With home ownership comes creative freedom.
• While many rental properties are strictly against pets, buying a home means you have the power to own a pet without having to consult a landlord for permission.

Cons:
• With home ownership comes financial responsibility, meaning that any damages that happen to your property are consequentially your responsibility. For example, if your A/C unit breaks down, it’s up to you as a home owner to fix it, as opposed to having a landlord handle it in a rental home.
• When you own a home, you do take the risk of losing some of your investment. While housing prices have been on the rise, the financial crash of 2008 has shown that home ownership is not always a secure and stable investment.
• Buying a home can be a huge expense, so unless you have a mountain of cash lying around you are most likely going to need a home loan. Even so, with a home loan you will still need to put down a significant down payment of 3.5-10%.
• You may eventually want to sell your home. In the instance that you’d like to move or relocate, you may find it harder to sell on your terms. Depending on the season and current state of the housing market, you might find it difficult to sell your house right away.

Insights
There are definitely some advantages to renting and home buying. The question you should be asking yourself is, “what is financially right for me?”. Everyone is different and what might be right for you, might not be so much for another person. It’s up to you to figure out what suits your needs.
In the end, your living situation should be adjusted to your financial goals and budget. It may seem tough, but with the right financial institution, you can find a way to live how you like.

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