When your current lease is about to end, it's common to wonder whether you should continue staying on rent or purchase a house of your own. Well, while both these options have their own set of pros and cons, your personal situation is what determines which one is best for you.
So, if you are confused between renting vs. buying, it may be a good idea to know about the key differences it would make to your life. Here we have listed the main advantages and disadvantages of renting a home vs buying a home to help you make the right choice. Check them out below!
Renting a Home vs Buying a Home: Advantages And Disadvantages
Advantages Of Renting
Renting a home gives you more flexibility in choosing the area or locality of your residence. Once you buy a home, you are stuck in the same place for the rest of your life unless you decide to sell and move on. But living on rent is different - you can easily end your lease and settle down in another city of your choice without much hassle.
Lower Maintenance Costs
You don't need to worry about spending a huge sum on maintenance or repairs when you live in a rented place - that's the responsibility of your landlord. Have a broken appliance or a leaking roof? Just inform the landlord, and they will ensure it is taken care of at their expenses.
Access To Better Amenities
When you spend money buying a house, you may not have enough left to afford many upgrades or amenities for your home. But, since renting is cheaper in the short term, you can choose to live in a place with much better amenities than you could if you decide to purchase and renovate a house.
Less Upfront Costs
You need to pay a hefty sum as a down payment when purchasing a house, a minimum of 3% down for conventional mortgages or 3.5% for FHA loans. Rental leases, on the other hand, are much more affordable upon signing - making it a better choice for people who do not have a lot of cash on hand.
Potential Disadvantages Of Renting
Not Stable or Predictable
Renting provides you with temporary accommodation - there is a lack of long-term stability. Your landlord may decide to increase the rental rate, sell the property or end the lease on their whim, leaving you with a month’s notice to find another home.
Living in a rented house means you cannot make any major changes to the house’s interiors to better suit your needs unless you have your landlord’s permission. You will need to follow all the restrictions imposed by the landlord, which may include not playing loud music or not keeping pets.
Renewals Can Be A Hassle
Renewing your lease after it ends can be a challenge, especially if you have a difficult landlord. Firstly, you do not have a guarantee that they will be willing to renew the lease. And even if they do so, you may need to pay a higher amount as rent.
Advantages Of Buying A Home
A Sense Of Security
Buying a home gives you a sense of stability and security like no other. You know that you have a place to go back to after the end of the day. This isn't the case when you live on rent.
Total Control Over The Space
Purchasing a house means you have total ownership of it - you can do whatever changes to its interior and exterior as long as you have the necessary funds. You can customize the look of the house to suit your tastes.
When you obtain a mortgage, you can write off interest expenses and mortgage points associated with the loan. This could result in thousands in savings on income taxes. In addition, property taxes are also eligible for income tax deduction.
Home Value Appreciation
Although we see housing market swings every few years, generally home values increase in the long run. Homeowners that live in a property for only 2-3 years can often earn a substantial return if they choose to sell the property.
Disadvantages Of Buying
Expensive Down Payments
You will need to pay a considerable sum as down payment for buying a house. And as not everyone has enough savings for the purpose, you might need to apply for a home loan, which you have to repay along with interest within a fixed period.
Substantial Maintenance Costs
Maintaining a house isn't easy - you will have to take care of all minor and major repairs to keep your house in good condition. And that will add to your yearly expenses.
Renting Vs Buying: Which One Should You Choose?
When it comes to renting a home vs buying a home, it's difficult to say which one is better than the other. We've made a list of reasons you might want to stop renting and start owning, but in general, you should make the choice based on your lifestyle, credit score, ability to make a down payment. If you're located in a market where the average home values are not substantially above the nation average, buying a home could certainly be the wise decision.
SimpleShowing offers down payment assistance in the form of a 1% buyer closing cost credit in Florida, Georgia and Texas. This often helps prospective buyers make the move from renting to owning. Contact us today to learn more!