Choosing between renting or buying a home is a big decision that largely affects you, especially your financial health. Owning a house is perceived as an investment where you will be more likely to build equity over time; meanwhile, renting provides flexibility and less responsibility. Neither is right or wrong and is largely dependent upon the person. Read on for items to consider when determining your next move.
Renting
Easy to Move
Renting allows for moving with little cost. This provides flexibility for those that enjoy traveling or don’t particularly like where they live. It’s fairly standard for property managers to give 1-year leases, so if you move before your lease-end, you could expect an Early Termination Fee. However, there are places that will do 3-month, 6-month, or even month-to-month leases.
Maintenance
One of the biggest draws of renting is the maintenance-free lifestyle. Oftentimes, when residents decide to rent, it’s because they want a modern remodel without the cost and upkeep so they have more time to focus on other things they enjoy.
Amenities
Another large part of why people enjoy renting is the amenities that some properties provide. From pools to gyms, theater rooms to community events, some properties allow for ways to meet new people and have fun without an extra expense.
Remodeling
Unfortunately if choosing to rent, one quickly finds that they aren’t always able to customize colors, appliances, countertops, or other areas of the home. Therefore, not every rental is going to fit your style.
Rent Increases
Due to market fluctuation and inflation, rental rates can increase each time your lease is up for renewal. If you live in an up-and-coming part of town that could mean a steep increase. These are usually difficult to predict and plan for.
Buying
Building Equity
Homes are assets. You are able to live in, sell, or even rent the home you buy. Most of the time, houses will grow in value over time, which allows for you to build equity in the asset. Depending on market conditions, if you choose to sell, you’ll oftentimes see a gain on your investment.
Mortgage Interest Deduction
Nobody enjoys paying taxes! And not many enjoy paying interest either. However, one benefit most don’t know about is that when it comes to taxes, one of the best deductions is the Mortgage Interest Deduction. The IRS allows you to deduct the mortgage interest that you’ve paid in the previous year. In the early years of the loan, when you are paying more interest, this will be more beneficial.
Modifications and Remodels
As long as there are no city or HOA(Home Owner Association) restrictions, you can do almost anything you want to your home. This could include anything from painting or even adding another bedroom. When you own your home, you have the freedom to customize it to your liking.
Maintenance Costs
Buying a house comes with maintenance. Big-ticket items such as a leaking roof, broken HVAC, or foundation issues cost money and take time, so it’s something to consider before investing in that dream home.
Mobility
Different from renting, owning a house doesn’t always allow for a quick and easy move. Depending on your situation, you’ll most likely have to sell your home before you can move. Market conditions can fluctuate and sometimes selling is easy and other times it can be difficult and costly. Also dependent upon how long you’ve owned the home, you won’t always have had time to build the equity to cover your initial investment.
