Buying versus Renting a Home
There are many pros and cons of buying versus renting a home. Buying a home has its advantages and disadvantages and so does renting. The individual’s personality and person preferences play a big role in the pros and cons of buying versus renting a home. There are financial factors attached to the pros and cons of buying versus renting a home as well as obligations on buying a home. On this article, we will be discussing the pros and cons of buying versus renting a home so you can decide whether which option best suits your needs.
Buying versus Renting a Home: Commitment
Almost half of the population are renters. Renting a home does not require a long term commitment. You can normally rent a home on a short term lease or even month to month. Most landlords would want a security deposit of two months rent which is normally less than a down payment on a house.
Advantage of Renting a Home versus Buying
Another advantage of renting a home versus buying a home is that the renter are normally relieved of maintenance costs. The renter does not have to worry about replacing a roof, fixing the furnace, mowing the lawn, shoveling or plowing the driveway when it snows, or repairing the appliances unless it is specified in the rental or lease agreements.
Renter is not Committed to One Place
A renter is not committed in one place. A renter can normally give a 30 day notice and move out. If a renter has a lease, the renter can move out at the termination of the lease or can terminate their lease for a fee or negotiation.
Pros and Cons of Buying versus Renting a Home
Every advantage comes with a disadvantage. That is how our world works. The disadvantages of renting is that you are paying your landlord’s mortgage payments and helping him develop equity on your rental home. You are not building any equity and you will never ever see your rent payments. It is an expense.
Renters cannot benefit from Tax Advantage of Homeowners
There are no tax advantage benefits to you as a renter. Homeowners can tax advantage of mortgage interest tax deductions, property tax deductions, and depreciation.
If you are a long term renter, the chances are that your monthly rental payments will increase every year you sign a new lease. A homeowner with a 30 year fixed rate mortgage has the same mortgage payment every month for 30 years. It might be more or less if the property taxes and insurance on the home increase or decrease but the mortgage payments will never change for the 30 year duration.
Restrictions to Renters from Landlords
A renter will be restricted on how to decorate their home without the landlords permission. A renter might also be restrict on having pets. You as a renter do not have the same type of freedom as a homeowner. You as a renter do not have home security as well. If your landlord wants to sell your home or rent it to someone else, he can not renew your lease and ask you to move.
Homes can Appreciate
There are many pros and cons of buying versus renting a home in California, Illinois or Florida. Buy purchasing a home, you automatically build up equity as each month goes by when you make your principal mortgage payment. Your home can also appreciate in value. You have total control of your home and decorate it the way you like it and can have any pets you like without asking anyone. You also have home security where nobody can ask you to leave unless you default on your mortgage or property taxes. As a homeowner, you will be given the advantages of many property tax benefits like deductions on mortgage interest and property taxes.
Negatives of being a Homeowner versus a Renter
Some disadvantages of owning a home versus renting a home is that you do not have the luxury of just picking up your bags and some furniture and relocating. It is a commitment. Once you purchase and close on a home, you are pretty much stuck there for a few years. A home buyer should do extensive due diligence when deciding on buying a home. If you got crazy neighbors, you will be stuck with them.
Homeowners needs to maintain their homes
Another disadvantage of owning versus renting a home is that you are now in charge of maintaining your home. No more landlord to call. Whether you do it yourself or decide in hiring someone, you are the Chief Executive Officer of your home maintenance department.
Qualifying for a Home Loan
There are many pros and cons of buying a versus renting a home. Potential home buyers should consult a mortgage broker to see what they qualify for and what their monthly housing expense will be. Many times, a monthly mortgage payment with insurance and taxes can be lower than the renter’s monthly rent payments.
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