Renting Vs. Buying A Home: Which Is Right For You?
Buying a home is one of the significant decisions that a person can make in his lifetime. Some homebuyers wonder if their decision to buy a home is the right one since it is normal for anyone to change their mind even after many years. There are advantages in purchasing a home, but some also consider its disadvantages, especially if it does not suit their lifestyle. Depending on your preferences, owning a home or renting will be the better choice for you. Take a look at your situation first and read on as we discuss the good and bad things about renting versus buying a home.
Is Renting a Home Right For You?
Low budget individuals who wish to live in the home of their dreams often decide to rent instead of buying a home. It is understandable because the initial investment you need to rent a flat or a house is meagre compared to when you intend to purchase. Often, buying a home requires somewhere from five to ten times the rent amount for you to move into a house you buy.
Generally, renting costs less than the funds used for a down payment or mortgage payments can already be invested and bring higher returns. This situation is true in areas where the property is to be used for less than four years.
Additionally, renters have a limited responsibility towards the property. They are not obliged to handle repairs in case of damage. It is the landlord who is responsible for these tasks. But for homeowners, it will be the owner who will cover and handle all repair needed.
When you decide to rent, you don’t have to worry about property taxes. You enjoy the benefits of living in a house you love without the constraints of documentations and taxes. More so, rental fees are fixed, and in some contracts, it also covers utilities. It means that you will have an easier time budgeting because you know full well how much you need to pay to your landlord.
For people who are often on the move, renting is much more beneficial because leases are short term. You will not have worries about disposing of your property when you need to travel or move to another location. It gives you more mobility and flexibility to rent a house.
What Are the Advantages of Buying a Home?
Suppose you weigh the advantages of renting vs. buying a home. In that case, the most significant benefit of owning a house is the equity it builds over time. Unlike when you rent, your monthly mortgage pays for the property's actual ownership - the house and the land. You can even tap on your equity with a home equity loan and refinance your mortgage for a lower interest rate.
Over time, you may also add value to your home through investments and home improvements. There are also tax deductibles for green and sustainable energy home projects. Your home’s projected costs grow significantly in the long run.
Although not all homeowners are qualified for tax benefits, many categories cater to homeowners. Some of the most common include homestead exemption and federal tax deductions.
When it comes to homestead exemptions, some states allow a portion of the property to be exempt from tax burdens that are typically charged. The fees differ, but it is a massive saving for you and your family. Additionally, federal tax deductions, property tax, and interest on your mortgage can be reduced from the federal income taxes. Renters do not enjoy these benefits.
Potential Income From Rental Property
Most homeowners don’t initially consider a home as a business investment. Still, it can also be one of your sources of income. Doing this can help you offset your taxes, mortgage, and insurance payments.
One of the ways to monetize your property is to rent out a portion of the whole property. As long as you comply with your local rental laws, you can accept rental applications for your basement or turn your home into a duplex to rent out a unit. If you need to move to another location, you may rent out the whole house or explore the home-sharing market through short term rentals like Airbnb.
Have More Creative Freedom
Homeowners have the freedom to decorate or renovate their homes rather than renters. You can apply some DIY projects or do any home improvement options that you like as long as it complies with the local building code. You can change bathroom fixtures, build a deck in your backyard, modernize your kitchen, or create an entertainment area in the basement. You can change your home anytime, according to your whim, because you own it.
You Have a Sense of Belongingness
Living at the same location after some time, homeowners start putting down roots in their community. Some become members of a local neighbourhood association. You start joining volunteer works at the community centre or connect with your children’s school group. These activities are not thoroughly enjoyed by renters who might move out of the area after a few months or years.
Should You Rent Or Buy A House?
When deciding between renting vs. buying a home, consider how long you intend to stay, financial capacity, and lifestyle. If you stay in one place for more than five years or plan to grow your family, buying a home might be the best option. It has plenty of advantages for you in the long run. It builds equity, offers tax exemptions, gives you more freedom to decorate and renovate.
Buying a home gives you a sense of security and belongingness to a community. However, if you will be staying for the short-term and you are still saving up for other expenses, you might benefit more by renting a home or flat that has everything you need.