To rent or buy a home, that is the question.
To own a home is a life goal for most Americans. However, not everyone is financially equipped to do so.
Home ownership isn’t always the best decision, nor is renting better than owning. Both have their own pros and cons, so let’s discuss them one by one.
Renting
The Good:
- It gives you flexibility. If you have plans to relocate in the near future, because of your work, family or just because you are not sure where to settle yet, then renting is best option for you.
- You are not responsible for maintenance or repair. With renting, you are paying for the luxury of not having to worry about these things.
- You’ll pay less for Utilities and Insurance. Unless you are renting a large home, a small rental home has lower utility costs since it requires less electricity usage.
- You don’t need to worry about property values. Since you don’t own the property, you won’t be affected with the changing economic conditions that may decrease the value of your home.
- Big upfront payments are usually the concern of most people who are just settling in. With renting, you can avoid high initial down payment costs. Going through a background check is also less strict. As long as your credit report doesn’t have bankruptcies and judgments, your application will be more likely approved.
The Bad:
- There is no stability in renting a home. You’re in a temporary living situation and for whatever reason, your landlord can remove you anytime, with a 30-day notice.
- Your housing costs aren’t fixed. Over time, your rent will increase as inflation pushes up the cost of living.
- The money that you put out every month is not being invested in long-term security nor building a savings.
- There is no tax incentive.
- You have to abide with your landlord’s rules and regulations. You don’t have a freedom to make renovations or major decorative changes.
Owning
The Good:
- You have control over your own home. You can decorate, reconstruct and do whatever you want with your space.
- Owning a home means that you have an asset that can be sold in the future or used as collateral if needed.
- It’s a long term investment because over time, the value of your property can increase.
- You have the ability to write off your home on your tax returns while renting one won’t give you any tax benefit.
- Home ownership gives you the pride of ownership, sense of stability and belongingness in a community. It works out well for those who have decided to settle in one place.
The Bad:
- Investing in a house costs a lot of money and that doesn’t stop there. There are a lot of utilities, maintenance and expenses that you need to pay continuously as a home owner as compared to just renting.
- Aside from the fixed house costs, there are also unpredictable expenses that come and go.
- Moving homes is a lot more complicated when you’re a homeowner.
- Reselling your home is not easy either. Due to economic factors, you can run the risk of not earning a profit through resale.
Bottom line is that there is no universal or best choice between home ownership and renting. The answer to the question whether you should rent or buy a home depends not only on your financial situation and career but on your preferred style of living as well. It’s a major decision that doesn’t happen overnight. Weigh the pros and cons and consider not just your present situation but your future as well.
