Every American dreams of owning a home someday. But, that doesn’t mean that renting is a bad option. In fact, homeownership may not be right for everyone since owning a home is a costly endeavor in the US.
For some people, it makes more sense to rent a house; especially if their financial situation doesn’t allow for a huge expense like buying a home.
In this post by Cash for Homes, we look at the different advantages that buying versus renting carries.
Advantages of Buying a House
You’ll Build Equity
Equity is the worth of the home/property you own. This equity keeps on growing with the growth in the market value of the home.
Homeowners enjoy the benefit of leveraging their home equity. They can access it by redrawing loans on it. Or, they can borrow money on top of their equity. They can then use those funds for myriad purposes such as buying a car, going on a holiday, renovating their home, etc.
A Sense of Certainty
When you rent a home, there’s always a sense of fear and anxiety. You never know when the landlord may untimely terminate your lease agreement.
On top of that, the hassle of constantly having to renew the rent agreement is another headache you have to handle every single year. Negotiating the terms of the agreement is not everyone’s cup of tea. Being a homeowner takes away all of that hassle.
Helps to Build Assets
The rent you pay every single month doesn’t contribute to your credit score development or equity. By taking out a home loan and paying monthly EMI – you can slowly build assets over time.
Every single monthly EMI that you pay leads to an increase in your equity.
Pride of Ownership
Being a homeowner brings a sense of pride and joy to the household. Community-wise also, people who own homes are respected more, in general.
A better sense of community coupled with the pride of ownership are some more benefits to think about if you’re feeling dicey about whether or not to buy a home.
You get a chance to be a part of the community. You get to build relationships with neighbors, service employees, local politicians, and firefighters. When you don’t have a permanent residence, all of these things can be difficult to achieve. For those who love being involved in the community, owning a home is the best option.
Greater Control Over the Living Space and More Privacy
Unlike renting, living in your own home gives you total and complete control over your living space. You also get to enjoy greater privacy.
When living in a rented apartment, condo, or townhouse, you would first need permission from the landlord or the HOA board before you can make any changes to the property. There may be limits on owning pets, noise restrictions, etc.
With your own home, you can design/modify it however you like. You can own a pet, adopt kittens, or do things as your heart desires. The only things you would have to take care of is not breaking the codified laws and those set by the HOA.
Advantages of Renting a House
The majority of the decoration, repair, and maintenance work will be the responsibility of the landlord. All of these things are rather expensive. So, with renting, you don’t have to worry about that.
You would only be responsible for minor maintenance work such as fixing a blocked sink, etc. Any of the major structural, property work will be the responsibility of the landlord or their managing agent.
Landlords will have to take care of the homeowners’ insurance and also ensure any appliances or furniture that are part of the let. As a tenant, you will have to insure your own possessions only.
If you are a business person or someone who is constantly moving from one place to another, buying a home is not the smartest option. If flexibility and freedom are your biggest priority, then renting a home is the best option.
If you want to travel or move across the country, all you have to do is break the lease rather than sell the house. The former is a lot quicker. It’s a more convenient option.
Predictable Monthly Expenses
One of the things about the rent agreement is that the monthly rent is mostly fixed. At least, it’s fixed for a certain period. During that time, the landlord cannot increase the rent. The only exception to that is if the tenant agrees to pay extra rent or the agreement allows for such an increase.
This kind of knowledge gives you the freedom to budget more efficiently and accurately. There’s no need to worry about the housing market fluctuations.
No Real Estate Taxes
A major benefit of renting over buying a house is that renters are not liable to pay any property taxes. Many homeowners find real estate taxes to be a hefty burden. Depending upon the county that you live in, you may have to pay thousands of dollars in property taxes annually.
Both renting and buying a house comes with their own set of advantages. Depending on your personal and financial situation, you can weigh the two options and see which ones make the most sense. Just remember – there’s no right or wrong option. There’s just a better one out of the two.