If you have ever wondered if it’s better to buy or rent a house, you’re not alone. Renting vs buying a house is a hot topic. Whether you rent a home or buy a house, the underlying value is shelter. Getting shelter for you and your family is especially important. Therefore, sticking to what works best for you is the ideal option.
These are some vital points to consider
- Owning a home is ultimately a huge financial commitment that requires a lot of planning. Therefore, renting may be a more appealing option if you do not have it all together yet.
- Before you rent or buy, you need a budget that wouldn’t harm your finances.
- It would be good if you considered staying consistent with other financial and savings goals. So that your choice to buy or rent a house does not affect other aspects of your life adversely.
Renting vs Buying A House
Pros of Buying
- Possible tax benefits
- You can customize your space to your personal taste.
- Possible to renovate hence boosting your home’s value.
- No landlord to answer to
- Freedom and stability
Cons of Buying
- Buying a house requires upfront payments, paperwork, and other closing costs.
- Home value could rise and fall at any time. You could lose money when value declines.
- When the interest rate rises, your repayments rise too.
- You are responsible for repairs, remodeling, and extra expenses.
Pros of Renting
- Lesser upfront costs and paperwork
- Freedom of mobility
- No property tax bills
- Renting builds credit if rent payments are made to Credit Bureaus
- You are not responsible for repairs, maintenance, and other costs.
- Relocating is easier when you change jobs.
Cons of renting
- A landlord has the right to raise costs or sell a property.
- No direct tax benefits
- Renting does not build equity.
- Vacancies are limited.
Renting vs Buying A House, which is cheaper?
Several costs come with renting or buying a house. However, they depend more on where you live and the housing market in that location. These are some common costs,
Most rentals require a security deposit. A security deposit is a sum that protects the landlord against any potential damages. A renter will usually put down the first and final month’s payments as they sign a lease. However, be sure that you confirm if your rent includes utilities before you sign.
Homebuyers or homeowners pay more. These are principally the monthly mortgage payments that are usually the principal cost of a mortgage and its interest. Note that payments fluctuate if the loan incurred is on a variable-rate. Also, prices go up or down when property taxes or homeowner’s insurance premiums change.
When you’re in the market for a home, buyers must pay home inspection fees and other quotes for repair especially if needed by contractors. Furthermore, you may pay at least 1% of the sales price, although this may vary for real estate agencies. Hidden expenses often come with homeownership hence leaving first-time buying totally off their guard. Below are some of the expenses that come with buying a house.
One time Homeownership costs
- Mortgage origination fees – an upfront fee charged for loan processing.
- Closing costs- escrow fees, interest, and property taxes.
- Realtor/lawyer fees
Ongoing Homeownership costs
- Mortgage interest payments
- Maintenance and repairs
Consider the location
No exposition on renting vs buying a house can ever be complete without touching on location. Having a clear-cut picture of what you want and where you want it helps your decision. Once you have the location, you can compare rent or buying prices and make the ultimate choice.
Wrapping it up
If you have done all the research, picked a suitable location, and you still don’t have a decision, don’t worry. Renting vs buying a house will most likely remain a debate between people because you’re getting shelter if you buy or rent. Even though your house is yours, buying a house may not always be a great investment. If you’re considering either, it would be best if you considered asking the following questions,
- What can I afford?
- How long do I plan to stay in this space?
- Do I want stability or flexibility?
- What are my goals financially, career-wise, and for the family?
- Can I take responsibility for repairs or maintenance?
- Will I change jobs soon?
Remember that renting doesn’t make you immature, and buying is not a sign of financial freedom. A house is not just a possession, it is where you will live. It’s fine to weigh your options thoroughly before making a final decision.