When deciding whether to rent or own a home, there are advantages and disadvantages for each. Your long-term goals play a major part as you weigh the pros and cons of renting or buying.
Some people are perfectly happy renting without worrying about the problems and responsibilities of home ownership. Others feel more secure in an established place where they can raise a family.
Here are the pros and cons of renting vs. owning to consider:
Pros of Renting
Renters have the flexibility of moving whenever they want as long as they honor the lease agreement. That’s a positive for people on the go who might want to try living in different locations, Investopedia points out.
There are no concerns about mortgage payments, property taxes, homeowners’ insurance, flood or earthquake insurance, maintenance costs, and water, trash, sewer, or pest control fees.
It might seem like you are throwing money away to the landlord each month, but you could save money in the long run because you don’t have to pay for unexpected repairs and other costly services for the property and building, notes the Truth About Mortgage.
You don’t feel so trapped. It might be a hassle moving, but it’s much easier to pack up and leave when you rent without dealing with the property obligations of a home.
Cons of Renting
Despite all the rent payments you make, you don’t really own the home after all those years.
You have your freedom, but you don’t have a permanent place for a household, almost as if you don’t have an established home.
Although you don’t have to worry about selling a home to move, the landlord could sell the property, so you must move, or the sale to another property owner could result in a dramatic rent increase.
Tenants are bound by the rules of the property owner, Property 24 explains. You aren’t necessarily free to make changes to the unit or rented home. Pet owners might not be allowed to have pets.
Pros of Owning
Owning a home provides wealth creation and security with appreciation in the value of the home over time. You could earn a big profit on the structure if you decide to sell.
You actually own something instead of losing money each month to a landlord, and when the mortgage is paid off, you own the property free and clear.
Your mortgage payments are probably cheaper than rent in certain locations. You also have tax advantages, writing off interest and certain tax deductions on property.
You can do what you please with your property, putting on additions that make the home more valuable or making it a pleasant place for you and your family, just the way you want.
Cons of Owning
Regular house maintenance or occasional repairs can take a big bite out of your income. There are also property taxes, costs for water and sewer services, and insurance that can increase over time.
If you decide to sell because you need to move or the neighborhood is changing, it could be difficult during a down housing market. Plus, the transaction costs of moving from a home are significant.
The house could lose value, depending on the area. You could be at risk for foreclosure if your mortgage payments exceed that value.
It’s nice to call something your real home, but you don’t have the mobility of renters. A job or other change may make selling a necessity, but it could take longer to sell than expected, making it difficult to buy a new home.
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