This Article On Owning Versus Renting Home And How To Qualify For Mortgage Was PUBLISHED On October 30th, 2020
Owning Versus Renting Home:
The age old question when wanting to become a first time homeowner:
- Do I purchase my home?
- Or do I find a rental to suit my tastes?
- If I do not buy a home now will I lose my chance in the future do to rising home prices?
- Interest rates are at historic lows; would interest rates go up?
- Should I take advantage of the low rates and purchase a home?
- How much money do I need to purchase a home?
- Can I afford a home?
- Having been on both sides of the argument in the past 2 years, I can speak from experience and give both the pros and cons of each decision
In this article, we will cover and discuss Owning Versus Renting Home And How To Qualify For Mortgage. Gustan Cho Associates are experts in helping renters become homeowners.
Benefits Of Owning Versus Renting Home
Pros: The main pro of owning your own home is having the ability to do whatever you want, whenever you want to do it, and how you want without getting permission by your landlord or property management company.
- This could mean painting your powder room that lovely shade of chartreuse you have always envisioned
- Or planting 3 dozen rose bushes in your front lawn
- Or having that EDM dance party at 2 am
- Or constructing the Taj Mahal of swing sets for your little ones
- Basically, since you are making that mortgage payment, please feel free to treat your house however you’d like
- Another benefit of owning your residence is the ability for tax deductions
- If you itemize your deductions, you are able to count the interest paid on your mortgage as a deduction as well as the property tax
- Another tax deduction can be had if you work from home and have a dedicated home office
- For this space, you can take an allocation of the mortgage and utilities as a deduction as well
As always, please check with a tax professional when claiming this deduction as it is under high scrutiny from the IRS.
Negatives Of Owning Versus Renting Home
Cons: Gone are the days of the unbelievable appreciation in real estate values as that bubble has long since burst.
- If you are looking at a home as a quick investment, I would strongly discourage this mentality
- Realize and know that appreciation in value will probably follow inflation or slightly higher rates, but not the double-digit increases of years past
- Another downside to owning is the “you break it, you buy it” rule
- If something like an appliance should break, it will be on you to make the necessary repairs and get the items back to working order
If not planned for properly, spending $4,000 on a new furnace and AC unit, might hit you pretty hard!
Pros And Cons Of Buying Versus Renting House
Pros: The ability to be selective and choose a location that is to your liking is the main positive of renting. After a year or two, if you don’t like where you are living, you can just pack up and move somewhere else:
- As your taste and desires change, you can change where you live
- Another good reason to rent is it is favorable to individuals with bad credit
- Most of the time your credit will be pulled prior to moving in, but as long as you have first month’s rent and security deposit, more than likely, you will get the place
- In doing so, you can start putting together a history of recurring monthly payments which will assist you when looking to purchase a home in the future as it shows creditworthiness
- A final reason is maintenance is normally included in your rental
- Should an appliance or something with the home/apartment/condo fail, it is the owner’s responsibility to bring it back to working order in a timely fashion
Cons: If you live in a location where the rent can fluctuate, you may not have control or the additional funds should your rent increase past your budget. In this case, you would minimal time to find a new place to go and move out
- If renting a home you might be subject to the owner not wanting to renew your lease/rental agreement
- Or better yet, they may sell the home, ultimately leaving you homeless and with minimal time to move out
- Another downside to renting is not having the freedom to decorate or make changes to the place you are living
- I know from experience, my old landlord wanted to keep the walls in her townhouse tan, and if I were to change the color, I would need to paint it back prior to leaving
- However, how was I going to do this if there wasn’t adequate paint left?
I had to match the color exactly and it was up to me to get it back to normal.
In Conclusion On Buying Versus Renting A Home
In closing, there are both pros and cons for each situation, and ultimately it is up to you how you wish to proceed.
- When my credit was less than stellar, renting really helped me out as I was able to show 2.5 years of monthly rent payments made on time
- However, it came to that day where I wanted to be a homeowner again and that is where I am at today
- Before you make a decision, make sure you do your research and ultimately do what is best for you!
About The Author
Michael Gracz is the National Sales Manager and contributing editor for Gustan Cho Mortgage And Real Estate Information Center. Mike is producing a loan officer and has been a career mortgage banker. Mike has helped thousands of clients in not just doing their home loans but has been a trusted advisor to all of his clients in areas of financial planning, investments, tax advice, and financing. Due to the complexity of the mortgage lending business, Mike believes that knowledge is a must. He is always on top of new mortgage guidelines.
The management and team of Gustan Cho Associates are extremely proud and blessed to have a rising star like Mike Gracz become a member of our growing company.