Are you tired of renting? Then maybe it’s time to start settling down and buying your own home. But is it better to rent than to buy a house of your own? When it comes to these two choices, most will choose the obvious one.
Having a house of your own is indeed a dream come true. However, homeownership is not for everyone. Not all can afford to buy a home with cash. While there are financing options available, not everyone is qualified to get approved for a mortgage.
On the other hand, renting is a good option for those who don’t need more responsibility on their plate. But what if you already found your dream home while browsing new houses for sale? Will you finally leave your rental and invest in your dream house?
Renting and buying a house has its pros and cons. Before making a decision, it would be best to assess which one would be a better choice.
Perks of Renting
You Can Move Anytime
Some people have work that requires them to be always on the go, or for people who enjoy exploring and living and different cities, then renting is for you. Some landlords need their tenants to sign a contract for a minimum number of years or months stay. However, it’s still easier to leave a rental home and move on.
Renting is Usually Cheaper
The amount of cash you need to pay for rent depends on the city or town. While it may require you to put a down payment to move in, the costs are still cheaper than buying a house. All you need to pay is your rent and utility bills.
Poor FICO Score Is Not Much Of A Concern
Some landlords do credit checks on people who wish to rent their property. This is to ensure that they can and are responsible enough to pay their monthly rent. However, the process is not as vigorous compared to home buyers applying for mortgages.
Cons of Renting
It Has No Tax Breaks
Renting a home meant you didn’t qualify for tax breaks. This only means that when you file for tax returns, you’re not eligible for any tax deductions.
Increasing Rental Rate
The amount you pay your landlords for the rental can increase yearly. This is dependent on the contract you sign and the annual rental fluctuation rates.
No Return on Investment
When renting, you don’t get any return on investment since the property won’t belong to you in the future. It doesn’t matter how long you stay and rent. All cash will go straight to your landlord.
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Perks of a Home Purchase
Return Of Investment
When you buy a house, you’re sure that you’ll get something in return. It doesn’t matter if you pay for it with cash or by a mortgage. The house will be yours.
Build Equity
The value of real estate usually appreciates over time. This means if you bought your house with the help of a home loan, you get to build equity as you pay your lender.
Tax Benefits
Unlike renting, you get to take advantage of tax breaks when you become a homeowner. You get to deduct property taxes along with other tax breaks.
Get as Much Freedom and Privacy
Since you’re the owner of the property, you can do whatever you want. Decorate it as you wish, and you get that much-needed privacy that renting won’t allow.
Mortgage Financing Options
Lots of mortgage financing options are available for homebuyers who need financial help. Even if you can’t afford to buy a house with your current savings, you can qualify for a mortgage. This is dependent on your income, current credit, and other financial factors.
Monetize Your Home
As a homeowner, you can do whatever you want to do with your home. Turn it into an investment property, and you can generate passive income. If you’re going to move and buy another house, you can also sell it.
Cons of a Home Purchase
The True Cost Of Homeownership
All expenses concerning your home are now your responsibility. Aside from the utility bills, you’re now responsible for the repairs and maintenance, property taxes, and homeowner’s insurance, to name a few.
Higher Monthly Mortgage Fees
If you have a mortgage, there are other fees to take care of like the closing fees and monthly mortgage fees. And the cost of a monthly mortgage is often higher than paying rent.
While owning a house seems like a dream come true, not everyone is ready to take up the huge responsibilities that come with being a homeowner. There are many things to consider before you can come up with a decision.
For one, you’ll need to check if you have no immediate plans of moving into another location before buying a house. Experts say that there is a five-year rule when buying a house. You may take a financial hit if you don’t stay in your home for at least five years.
Your finances can be the most significant factor when making a home purchase decision. If you’re already in a lot of debt, have a poor credit score, and have no steady flow of income, you may not be able to qualify for a mortgage.
Another factor to consider is if you already know what you want in a house and where you wish to settle for a long time. Keep these things in mind, and you’ll find it easier to decide if it’s best to buy or rent a home.