Renting vs. buying a home is a significant decision to make; it will also influence your way of life and your financial status. Owning a home is usually an investment that expects to create equity and a cause of tax deductions. Renting, on the other hand, is also advantageous, with less responsibility and more flexibility.
Often people think that buying a home is more financially practical than renting. Some people also view owning a house makes them feel more comfortable and feel like home and not just like a short-term dwelling place.
But generally, renting is a more affordable alternative. With renting, you are not attached to the property for a long time. And has a little accountability when it comes to repairs, taxes, and insurance.
The most popular misbelief about renting is throwing away money every month, which is not valid. A place to live is necessary for every individual and you have to spend money somehow.
Nevertheless, always bear in mind that owning a home is better than renting or the other way around. There are pros and cons when renting vs buying a home that you would always have to consider.
ADVANTAGES OF RENTING
- FREE FROM MAINTENANCE AND REPAIR COSTS.
One of the significant things about renting is that you would not spend money on repair and maintenance costs. Your landlord is the one that would take care of the maintenance and repair of the rental property. When there is a roof that leaks, you can inform your landlord about the problem, and they are the ones to fix it.
- ACCESS TO AMENITIES.
One benefit of renting is having access to amenities. Some of the mid-scale to upscale apartment complexes has luxurious amenities like in-ground pools and fitness center with no extra cost to the tenants. Unlike owning a house, if they want to have access to a pool or fitness center, they would have to spend a thousand dollars constructing and maintaining these amenities.
- FREE FROM REAL STATE TAXES.
One of the significant advantages of renting is that you do not have to worry about property taxes. Real estate taxes can be burdensome for the homeowner, and this tax rate depends on your city. In New York City, you can calculate your real property tax bill with this online Assessment.
- NO DOWNPAYMENT.
As a renter, you have to pay the security deposit, which is usually equal to one month’s rent. And upon moving out, you will be able to get this security deposit, given that the property or the unit does not have any damage.
- MORE FLEXIBLE IN MOVING OUT
Renters are more flexible wherever they want to live practically. On the other hand, the homeowner is restricted only to the area where they buy their home. For renters, they can live in an expensive city like New York City, but a home buyer may not afford to buy a property in this city.
- ADAPTABLE TO REDUCING THEIR BUDGET
If the renter wants to cut down their expenses when renting, they can search for a more affordable unit to match their budget.
- FIXED RENT AMOUNT
The renter’s budget will be more efficient due to the same amount paid every month. And the amount to pay for the rent is fixed for the entire lease agreement; whenever the landlord will have a raise on the amount of rent, they will notify the renter to adjust their budget.
- LOWER COSTS OF INSURANCE
Renter’s insurance policy covers are much cheaper than the homeowner’s insurance policy, and it also nearly covers everything owned, including furniture, computers, and other valuables.
- LOWER COSTS OF UTILITIES
Homes are usually more extensive than rental apartments. For that reason, they are more costly heat and electricity so they can have a higher electric bill. Rental properties are usually economical in space and have a more structured floor plan. That is why it is more economical to power and heat than other houses.
DISADVANTAGES OF RENTING
- TIE-DOWN TO A CONTRACT
Most of the landlords would have you sign for a year of a lease agreement. Therefore you have to live in the rental property for twelve months, and if you move early, you have to pay for the whole year even though you will move out earlier than twelve months.
- CONDITION OF RENTAL PROPERTY
In some inexpensive rental properties, landlords typically do some renovation to make the rental property more decent, but eventually, it will not fit the standard of the tenants.
- MOVE OUT HASSLE AND EXPENSE
Whenever you are moving out, it would take a lot of effort and time to box and pack your things and transfer them to your new place. You and your landlord should also have a Move Out Checklist to ensure that the property’s condition is well documented. It will also cost you for the movers and the rent for the vehicle.
- NOT-SO-GOOD LANDLORDS
As the saying goes, “first impressions last.” You first meet your landlord kind and have a smiley face, but they will show their true colors after days and months pass, especially if the landlord is living in the same building that you are renting.
- LIMITATTIONS AND PETS
Usually, there are limits regarding the number of individuals that can live in the rental unit. If it exceeds, there is an additional pay or an increase in the rental amount. Some landlords do not allow pets in the rental property. If they do, they have to charge an extra amount.
- LAUNDRY
There is only a public laundry area in most rental properties that the tenants are no other choice but to use. And it is inconvenient for the tenants to go to the basement of the building for the laundry.
- INCREASE IN RENTAL FEE
Some landlords may increase the rental fee annually whenever they do some renovations or repairs.
ADVANTAGES OF BUYING A HOME
- STABLE MONTHLY PAYMENTS
When you are buying a home thru a mortgage, you likely have a fixed-rate mortgage, and with that, it comes with astable monthly payments, which is one of the benefits of buying a home. With these stable monthly payments, you will have peace of mind, and you can make an anticipated monthly budget.
- BUILDING EQUITY
Equity is the property’s market value minus any liens of the property, such as a mortgage. And building equity is one of the significant advantages of owning a home. The more you pay the balance, the lower the liens against the property, and as the rate of the property increases, the higher the equity.
- CHEAPER THAN RENTING IN THE LONG TERM
The upfront cost of buying a home is more costly than renting but eventually, owning a home has more benefits in the long run. Some rental property has a lower mortgage than a monthly rental fee.
- TAX BENEFITS
Owning a home gives out solid tax advantages; one of the tax advantages is the opportunity to deduct paid monthly interest from your tax returns. There is an agreeable deduction at the end of the mortgage year, unlike in the first several years when the monthly payments are almost interest. The borrower can also deduct mortgage insurance fees and other home purchases from tax returns.
- PRIVILEGE TO CREATE CHANGES
One of the significant factors on whether to buy or rent is making changes to the property. When renting, you will not make even minor changes on the property, like painting a room, due to the inclusion of these rules in the lease agreement. A significant benefit of owning a home is that you are free to make changes from the smallest and simplest painting of the bedroom to a complete renovation of the kitchen and anything that you would like to do to make your house more feel and sees like a home
- CREDIT BUILDING
A great way of building a good credit score is the length of credit history. Usually, the mortgage is around 15 to 30 years, and having this in your credit history can significantly impact your score. Additionally, whenever you pay your mortgage on time, that will also affect your credit score and get a higher percentage of credit approval in the future.
- INVESTMENT AND STABILITY
Owning a home is one of the sources of a reliable investment. Indeed home is a costly purchase, but it also has a better return than a car. A car decreases its value as soon as you drive it. While owning a home is the exact opposite due to the local market conditions, the value of a home increases. And when it comes to stability, some people tend to stay longer in the property they buy since selling and moving out is much of a hassle.
- PRIDE OF OWNERSHIP AND INVOLVEMENT IN THE COMMUNITY
Considering the pride of ownership and involvement in the community is another benefit of owning a home. Several homeowners take excellent fulfillment in their community as well as their relationship with the community. Establishing a relationship with their fellow neighbors, local community service employees, and local politicians is somewhat complex to create if you are not owning a home and involve in the community.
- SELECTING A LOCATION
Buying a home allows you to choose the location where you want to reside. Location is an essential factor in buying a home. The freedom to choose the location and the neighborhood is one of the luxuries of owning a home. You can choose the proximity of your workplace, school, and other locations that can provide your necessities.
DISADVANTAGES OF BUYING A HOME
- LIABILITIES
If you want t to have a house, it will cost you a considerable amount of money. The upfront payment may be lower, but the terms and conditions may be less flattering for the buyer and may be bound to a 30 years loan term.
- REPAIRS AND MAINTENANCE
Years after years, even with regular maintenance, properties may lose their good conditions. Some repairs and renovations are roofs that have leaks, fences, and interiors.
- UTILITY BILLS
If you have a big home, that also signifies a higher utility bill. And utility bills are not deducted from their tax returns.
- FLEXIBILITY
Flexibility is one of the cons of owning a home; you cannot quickly move from another location. In cases that you will find a high-paying job outside of the proximity of your home, you cannot quickly sell the house and move out to a nearer place to your work. Or you may end up going to work with a time allowance that is inconvenient for you.
- RISK AND VALUE DEPRECIATION
Many risks accompany buying a home, such as an inability to pay taxes and mortgage, the inability to afford costly repairs, and changing neighborhood relationships from good to bad. In some circumstances, if you stop paying the mortgage interest, it will also affect your credit score, and credit value will drop as well. You will also not be able to get a bank loan in the future.
If you don’t have regular maintenance of your home, the value of your home will depreciate. Local conditions and housing crises are also some of the factors that affect the value of your home.
For many years some will say that renting is cheaper than buying a home because the money you save from renting will allow you to avail other things like savings. Still, it depends on the situation. Some will say that it is more practical to buy a home than to throw money on rent.
Regardless of others’ opinions and beliefs, the decision is still up to the person to rent vs buying a home. It is not always about money, but they often consider the comfort it may bring to individuals and their way of living.
Some people may consider buying a home because they want to make it their self-satisfaction and achievement, or some may consider it a permanent place to raise, build their family and raise their children.
And on the other hand, some people are more favorable to renting because it is more suitable for their lifestyle, financial position, and job.
