Renting vs Buying a Home
Renting vs Buying a home — it’s a decision many potential homeowners have to face. There are advantages to both and making the right decision can be critical to your overall financial well being. Below we’ll cover the positive side of each in order to help you make an informed decision.
It must be understood that there is no definite “yes” or “no” answer to this question because the real estate market is constantly in flux and very localized. Please take these factors into your decision making process.
Three Advantages of Renting a Home:
- Your overall financial outlay each month is generally less than the cost of a typical mortgage. Think about it: the mortgage may look cheaper, but what happens when the heat dies? Or the toilet clogs? When you own a home, you’ll have to pay for this, which could make for very some uncomfortable financial burdens. However, when you rent, most of the time it’s the landlord’s responsibility to maintain the apartment or home. Be wary though, these appliance issues could be problematic with an average landlord. If you do decide to rent, make sure your landlord is competent and trustworthy.
- There’s a certain amount of freedom you feel when you aren’t trapped in the same place paying off a mortgage for 15 or 30 years. When you rent, most of the time your lease agreement is on a yearly basis, so you’re free to pursue a new place to live after only a year.
- You don’t need a giant down payment in order to move into a rental property. Usually you only need first and last month’s rent, plus a security deposit.
Three Advantages of Owning a Home:
- Over time, you gain equity, or ownership in your home, which means over time the home or condominium actually becomes your property. This can have many advantages, such as tapping into that equity to improve your home or even use it as an investment tool for retirement.
- Owning a home lets you enjoy significant tax deductions and can reduce the amount of you pay in income taxes each year. Your mortgage interest and property tax payments may be deductible from your federal taxes as well as your state taxes. Additionally, in the early part of your mortgage, when you are paying the bulk of your interest, you may see a significant amount of money back in your pocket.
- When you own your home, you’ll be able to create the home of your dreams. You’ll have the freedom to renovate, paint, landscape and tailor your home to your personal vision.
- Your home is also your greatest asset. Think about it, a house is probably the most expensive purchase you will make in your life, and If you own a home and eventually pay off the mortgage, and if you sell at the right time you could make a tidy profit.
This is not a complete list of answers to the question of renting vs buying a home, but we hope the advantages we’ve listed for you give you some food for thought. If you have any questions, or are unsure of what to do, talk to a responsible mortgage banker, they can help you make the right decision.
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