When considering home ownership, there are many factors that play into the decision. Whether you’re a first-time buyer, a single homeowner or just looking to consolidate your savings, there are lots of ways to make this process more seamless.
Buying a home and renting a home are two very different options, each with its own advantages and disadvantages. Here are some things to consider when deciding between buying and renting:
- Cost: When you buy a home, you will need to make a down payment, pay closing costs, and possibly pay for mortgage insurance, property taxes, and homeowner’s insurance. However, if you rent, you will likely only need to pay a security deposit and the first month’s rent. In the short term, renting can be less expensive, but over the long term, buying may be more cost-effective.
- Flexibility: Renting a home gives you more flexibility to move around since you are not tied down to a mortgage. If you plan to move frequently, renting may be a better option for you. On the other hand, if you are looking to settle down and put down roots, buying a home may be the better choice.
- Responsibility: When you rent a home, the landlord is responsible for most repairs and maintenance. When you buy a home, you are responsible for all repairs and maintenance. If you are not handy or do not want to deal with repairs, renting may be a better option for you.
- Appreciation: One of the biggest advantages of buying a home is the potential for appreciation. Over time, your home may increase in value, allowing you to build equity. Over the long haul of housing, real estate has always been a great investment. They call it the American Dream. If you plan to stay in your home for a long time, buying may be a good investment. Building for the future. As your payments are made, there will gradually be a deduction in your principal balance therefore building equity in your home. You can later use this investment to help pay for retirement, college or even that Porsche that you will want one day.
- Taxation: That’s right… If you are renting, the owner is getting all of the tax credit and in some cases, this can be a good amount. When you are buying a home, you will be able to deduct your interest on your mortgage payments along with your property taxes from your taxable income at the end of each year. During the year that you buy the home, you can also deduct some of the closing costs that you incurred during the purchase.
- Customization: When you own a home, you can customize it to your liking. You can paint where you want to, put up a fence, get a dog, have your daughter write on the wall… Why? Because it’s your home! When you rent, you are generally limited to what the landlord allows.
Ultimately, the decision to buy or rent a home will depend on your personal circumstances and goals. Assess the market and asses your current situation: consider your financial situation, your lifestyle, and your future plans and this will help you make the best decision for you!