As you look to move, you may be contemplating whether buying or renting your home is the better option. For a variety of reasons and contributing factors, this decision is not one that is easily made. Evaluating where you are in your life and what your current needs are is important to making the right decision.
Though there are pros and cons that come with either purchasing a new house or renting a home. This makes the question of whether you should buy or rent your home one that lacks a clear-cut answer. To help make this decision, we’ve put together a straightforward guide for anyone who is currently struggling with the decision to either buy or rent their next home.
Factors to Consider
As you begin this process, you’ll want to first have a realistic conversation with yourself and/or your spouse about your current situation and needs. The phase of life that you are in could be the greatest determinant toward making your decision. Your relationship status, if you have children, and your career plans can all influence whether the investment in a home is worth it or not.
Your current financial situation can also greatly affect your decision. It can be helpful to talk to a financial advisor about your accounts and understand your debt-to-income ratio. They will be able to provide you with a clear outline of everything from your current credit score to how much house you can afford. Talking to trusted professionals in the financial industry can help alleviate some of the stress that many first time home buyers experience.
When it comes to buying a home, there are several benefits that can make the decision to purchase worthwhile. Investing in a home will help you build equity, which you can then use in the form of a loan, or credit as a source of finance whenever you may need it. It is also gratifying to have a home that only you own that you can transform into your ideal living space. Any upgrades that you make on the home could also help increase the value of your home, increasing the benefits of your investment.
Another benefit of buying a home is that it may be more affordable to do so than you realize. With a variety of loan options and government initiatives available to first time and conventional home buyers, buying their dream home is something many individuals can qualify for.
As exciting as purchasing a new home can be, it may not be the right choice for all. Purchasing a home requires both a down payment and a decent credit score. For individuals who are unable to meet these requirements, it can be frustrating to find a lending option that will allow them to affordably purchase a home. Not to mention the additional fees associated with buying a home, such as closing costs, repairs, and insurance. American homeowners are said to spend an average of $4,958 on repairs each year. Without the necessary financial foresight to set money aside for this purpose, it can be shocking to get hit with a bill like this after already making a major investment into the down payment on the home mortgage.
When buying a home doesn’t turn out to be the right option for you or if your situation requires more flexibility, renting a home can be a great option. With a lease, you are only required to live in that property for a year in most standard contracts, but some landlords are even willing to adjust the lease to as short-term as a month by month basis. For someone who may be moving soon for career or personal reasons, renting allows you to be flexible with your living arrangements. No matter what area you live in, there are several affordable options available to fit within your budget.
Another attractive benefit of renting a property is that the landlord of that house is required to take care of any necessary repairs. This means that you will not be financially responsible for anything that needs to be done on the property, unless you directly cause the need for necessary work, in which case you may be financially responsible. This is why landlords require a security deposit to be put down on a place. This deposit will be used toward any damage that may have been caused by you or a family member upon moving out, accidental or otherwise, but anything beyond that is required to be maintained by the landlord.
One of the biggest drawbacks that often gets neglected is the fact that renting a home for a long period of time can actually end up costing you more in the long run. When you pay rent on a property over several years, you could spend more than you would have by investing in a home of your own. Not to mention that paying rent for several years won’t build any equity, but paying the mortgage on a home you own for several years will. Additionally, many landlords do not allow their tenants to make changes to the home’s appearance. This requires tenants to stick to temporary decor items.
There is also less stability guaranteed with renting a home than there is with buying. For example, rent could increase over time, or a landlord may decide to stop renting or could even decide to sell the home. If you are somebody who values stability, then this may be a big drawback for you.
No matter which option you decide to choose, there are several benefits. It really boils down to your own personal preferences and needs in order to know which option is right for you. Thankfully, there are many resources and professional financial experts available to answer your questions on renting versus buying. Hopefully this guide has helped point you in the direction of some of those options and resources that are available while making this important decision.