Pros & Cons of Owning vs Renting a Home
A decision to buy or rent a house is not a straight forward issue and is largely driven by a number of factors. In order to arrive at a sound decision, you need to consider both prevailing market rental and mortgage prices and trends in interest rates and tax rates on mortgage packages in respect to your state or country. You should also consider your lifestyle. Consider whether your career entails a lot of traveling and shifting places, your privacy preferences and most importantly your income.
Ideally, most people consider owning a home as the best option that offers a form of investment and sense of pride. As stated above, that may not be true to everyone, and everywhere. Below are some of the pros and cons of owning vs renting a home that may help you make the best decision.
Pros of buying
- Paying mortgage increases the ownership degree and wealth with each payment. This therefore builds your equity which you can use to advance loans for other investments.You can deduct your property taxes as well as mortgage interests depending on your mortgage payment plan and agent.
- Home ownership gives you the freedom to make any minor and major adjustments to suit your need and comfort. You can add an extra room, repaint it or change the roofing, after all it is your house.
- Owning a home means you at liberty to choose whichever maintenance plan that suits you, you can freely fix the repairs yourself or decide to hire a contractor for the same
- Rental charges in most cities are greatly shooting up while the mortgage rates are dropping. This is due the “wait-and-see” attitude that most buyers have employed. It is thus relatively cheap in the long run to buy a house than rent in such cities.
- Buying a home gives you the sense of pride and accomplishment.
Cons of buying
- Buying a home can deprive you of the freedom to explore other residential options and its time consuming.
- You can be laterally stuck in one place waiting for prices to shoot up before selling your house and relocating unlike when you lease.
- Owing a house comes with occasional maintenance expenses that may eat a lot into your income.
- Buying a home is time consuming, complex and can be very costly. Some mortgage agents do include hided changes not to mention the occasional fluctuation in mortgage interest rates.
- Buying a house means accepting to put up with whichever type of neighbors and neighborhood you find yourself in, for a very long time.
Renting vs Buying Video
Pros of renting
- Renting a house doesn’t involve any responsibility for maintenance, repairs, and other such costly and time consuming aspects that comes with ownership
- Rental complexes may provide extra recreational facilities such as tennis courts and swimming pools that you could otherwise not afford when buying a house.
- Renting a home doesn’t require large cash outlay compared to buying where the dawn payment may be not pocket friendly, leave alone the monthly mortgage payment.
- Renting a home provides flexibility and mobility that may require shifting places due to career and family changes.
- Renting a house can also enable you live ‘above your means’ as it is possible to occupy a home that you could otherwise not afford to buy.
- It is also easy to make any necessary adjustments in your accommodation laxities should there be any cut or hike in your income.
Cons of renting
- You can’t build equity in your home as you are deprived that sense of investment and accomplishment, making some tenants feel like they are throwing money out of the window.
- You have minimal control over fluctuation of your house rent
- You enjoy less freedom to repair, change and customize the house to meet your personal needs. Most decisions are made by your landlord.
- You have very limited decoration options including painting, installing interior décor, new lawn or even ornamentals.
- Renting a home can be very expensive in the long run, a cost which could be cleverly channeled into long term payment of mortgage for home ownership.
Well, as seen above, the decision of owning vs renting a house will have to be largely based on the above listed pros and cons. You may however need to ask advice from your financial adviser who will be able to advise depending on your current financial income, savings, debts and projected future income. Alternatively, you may need to rent for a while as you wait for the dust to settle in the mortgage market prices.