Do you happen to be torn between the idea of buying your dream home or opting for the flexibility of renting?
The decision whether to buy a home or rent a space is a significant one that can have long-lasting implications on your financial profile and lifestyle. Delving into the benefits of buying vs. renting a home, we aim to help you gain a deeper understanding of the advantages that each option can offer for you as you start this journey. Exploring the financial, personal, and investment aspects, you’ll be better equipped to make a decision that’ll align with your aspirations!
Buying a Home
Giving you a sense of stability and dependability, owning a home can help you stay in one place to keep your life organized and with a sense of security. With no increases to things such as rent or the probability of having to deal with a not-so-great landlord or management conglomerate, you are provided with less variability in negative facets that may arise. Purchasing a home in an area that you have researched thoroughly, visited multiple times, and are sure to love can give you a sense of reliability that you need in a home. This can give you a sense of control you might’ve not had available when renting a space owned by another person.
Having a mortgage taken out for a property from a lender that you make payments on contributes positively to your financial profile and your equity. Building equity, over time, increases the stake of ownership exponentially as every payment is made on time and accurately. This is an incredible asset for a buyer to possess and to reflect in their finances for the following future because it shows a level of seriousness. Going through these motions of owning a property can lead to wealth accumulation down the road unlike how it would with renting. The money you put into a home versus money put into rent is surely different.
Sticking to the financial aspect of owning a property versus renting one, the tax benefits of owning are much more advantageous to someone in the market for housing. Being able to deduct the interest on mortgage payments as well as the property taxes can result in a significant save over what you may owe come tax time as a renter the coming year. There are many nuances to the benefits given through taxes via homeownership over being a renter, nuances that you can ensure you are knowledgeable about by seeking out the services of a tax professional.
If the housing market experiences ascending growth while you are the owner of a home (this is not guaranteed), the property itself will amass appreciation over time with significant value in your name. As we’ve seen in the past, the market fluctuates often, and if you are the owner of a home during these periods of progress, this can positively affect you in the way of long-term appreciation of the property you own. This can open up room for future investments as the appreciation is a means of personal wealth growth.
Renting a Home
Limited Responsibility and Upkeep
While not being the owner of the property comes with its fair share of frustrations and qualms, the limited responsibility of having to take care of things in terms of maintenance or outside upkeep can save you lots of precious time, money, and energy. The management team or landlord instead will have to deal with those issues, leaving you with more time on your hands and less stress in the head. We all know that maintenance issues can arise at any moment, primarily happening at the most inconvenient of times, and can cost a lot of money out of pocket. By renting, this can be avoided unlike if you were the primary owner.
Rent is getting incredibly expensive in a lot of areas. This is increasingly apparent and ever-present, but the price of homes is also increasing exponentially. Renting generally can be more cost effective and less heavy on the wallet compared to the expenses that come with closing on a home purchase when it’s put in plain terms. Though the amount down on a home can get as low as 3% nowadays from some lenders, security deposits are typically still lower cost than the downpayment of a home, thus being more accessible to someone who may not have a lot of money for a home.
More Freedom Financially
Being a renter, you’re not tied down to a twenty or thirty year mortgage like those who own homes are, keeping you in the same place for some time. Mortgages for some people are too long of a commitment, and that is not a bad thing at all if you identify with that. By not tying yourself down with the owning of a property as a renter, you can potentially save more money to reach financial independence and potentially become a homeowner in the future, if that’s what you want!
More Freedom Transiently
Sticking with the themes of freedom, being a renter can ensure that you’re not tied down to a space geographically speaking. As a renter, when your lease is up, you’re given the unique opportunity to either stay and continue to live in that space, or have the freedom to travel wherever you want in the world and settle there. Renting offers that flexibility whereas owning a home does not, and being a renter knowing you’re anticipating change can be an advantage.
Both choices offer significant benefits, while also having their cons, but in the end it is up to only your preferences and the preparedness of your finances. Before making any decisions, make sure you have assessed everything from your finances to the neighborhood livability to the perceived maintenance that will be necessary, anything that you may have queries about. Take the time to become well informed, and always reach out to a professional if you have any questions.
Remember, there is no correct choice when it comes to the housing that is right for you. We are all different people with different needs, be that purchasing a home, or being a renter for the rest of your life.