Is it better to rent or buy a house? A question that all of us have contemplated at least once in our lives.
Choosing between renting and buying a house is like deciding if you should marry someone – the answer is never definitive. However, if you put things into a balance, you can get a better idea of what’s best for you.
We prepared this blog exclusively for you to objectively show you the main differences that will guide your decision about whether you should buy or rent a house.
Renting might work out better for some people, while buying makes more sense for others.
It depends entirely on your personal preferences and lifestyle choices. Also, it depends on certain financial factors because one of these decisions will affect both of them in the end.
So, should you buy or rent a house? How do you decide?
To make the right choice for your life, you should ask yourself the right questions and do a preliminary search of your local housing market, financing options, and other areas where you need advice.
If you’re wondering whether buying or renting is best for your lifestyle, keep the following things in mind:
Do I Have the Money to Own a House?
Many people think they have the money to own a house if they consider their mortgage payment the only required investment. In reality, there are other investments you should make by buying a home.
But no worries, we have all those answers for you in the article below.
[Related Article: How Much Money Do You Need to Buy a House?]
When you rent, everything is included in your monthly accommodation fee no matter what. If you consider buying a house instead, you will have to factor in other costs related to living in a house.
While it’s true that houses may make for better investments over rentals due to appreciating value, be aware that this comes at the expense of more significant initial cash outlays and higher operating costs (as well as greater initial capital).
For most people, purchasing a house is still a better idea than renting, especially if you intend to live there for more than five years.
It also depends on the type of property that you choose.
Whether it is a single-family home, a multi-family, or a condo, each comes with different benefits for owning them.
For example, condos offer the advantage of buying a home, but without the responsibility of taking care of all repairs and upgrades yourself.
While you will still need to pay monthly dues to be part of the association, they will take care of all maintenance expenses.
Also, condos will likely come with features you would otherwise have to install yourself. Those amenities may include a gym, pool, air conditioning, or built-in appliances.
You’ll worry less that your property might need costly renovations to bring it up to code.
On the other hand, if you buy a multi-family home, you can live in one unit and rent the other one. You may be able to cover your monthly mortgage payments by renting out the other unit.
[Related Article: Ways to Invest in Real Estate (Explained Simply)]
We suggest you carefully examine the ground facts when wondering if you should rent or buy a house.
Do I have a good financial situation?
Renting a home may sometimes be more affordable at first sight, as it can help you avoid such expenses as property taxes, homeowners insurance, and mortgage insurance.
While buying a home may be an excellent option for some people, it’s not the right choice for everyone.
As mentioned before, there are many things to consider when renting versus buying.
The payments will differ, and you have to consider whether this will be affordable now and in the future, as your finances change, such as having children. These are just a few of the factors you should take into consideration.
In some areas, monthly rent payments are less expensive than monthly mortgage payments. However, there are situations where we get the inverse scenario: monthly mortgage payments are less costly than monthly rent payments.
It’s important to consider other circumstances like how much your rent increases yearly.
If you’re set on owning your own home, renting for a few years could be an excellent way to start saving up some money for the initial capital you’d need to invest.
Here is where we can help you. Get in touch with us at Real Estate Juan C, and we can guide you from beginning to end in this process.
Homeowners must budget for maintenance and upkeep costs.
However, if you decide to purchase a property and make improvements over time, these investments can increase the value of your home and save you more in the long run compared to renting.
What is your planned stay?
Unsure whether it’s better to rent or own a home? Do you have a long-term plan in mind?
If you have your heart set on staying in one place for at least 5 years, buying a home could be the ideal fit.
Most buyers build homes that truly feel like “theirs” by customizing them throughout the remodeling process with new fixtures and fixtures, flooring, paint colors, showers, etc.
By doing this, homeowners can create the exact feel they want in their space without worrying about paying rent and simply moving on down the line when they get tired of it. Plus, these customizations could potentially add value to the property.
In addition, if you plan to stay put for a while (which is common among owners), this will save you money because there are no more monthly rent checks and no rental increases yearly!
Rent vs. Buy – Assess the Risks
Regardless of whether you rent or buy, there are always risks. Owning a home can help buyers build equity over time.
While renting can be highly convenient, it’s not always the best financial choice.
Even if you aren’t burdened with any debt or maintenance expenses, if your landlord decides to raise your rent in the future – wait!
Some people might find themselves in much better financially when they aren’t making payments on a mortgage.
They can use this extra money to pay off massive student loan debt and save for retirement since rental properties usually carry no tax advantages beyond specific cases where an owner lives on site. The chance to own instead is a priceless advantage for these people.
Rent or buy: What are the pros & cons
Apart from your circumstances, renting or buying will, in most cases, have some objective benefits and drawbacks.
Pros of owning a home include:
- A larger space, your own space.
- You are free to make any changes you want to your home without neighbors or landlord interference.
- The investment is well worth it. There is no profit in your rental payments. Your mortgage payments may eventually become your savings account!
- Last but not least, by paying a mortgage for owning a home, you are paying for something that is becoming yours. Renting doesn’t give you this because with renting, you pay a monthly rent that will never allow you to own the place. Once the money comes out of your account, it is gone!
The cons of owning a house are generally:
- Maintenance costs.
- Property taxes
- Increased responsibility
Generally, the pros and cons of renting an apartment are reversed. If you rent, for instance, you won’t face maintenance costs, and your landlord will handle property taxes (you won’t). However, you won’t have any freedom to make any changes you want. Most importantly, if you rent, you’ll be spending money, not investing it like if you own the house.
Always remember… While the initial investment or mortgage payments of buying a house may be more significant, all this money is buying you a property. The money “disappears” with rent payments because you pay and pay, but you never own it.
Calculate rent versus buy
Owning a home is the classic American Dream and has been for generations.
Ideally, you should investigate a few things before deciding whether you should rent or buy a house: first, examine the market in your local area, so you know how expensive houses are to rent/buy as well as their historical values.
Additionally, it would help if you spoke with your lender or real estate agent about housing costs. This will help you understand the mortgage rate and other expenses associated with purchasing a property, such as taxes and insurance premiums. Try our Mortgage Calculator to help you weigh things into a balance!
If you’re still unsure whether you should buy or rent a house, we are here to help you.
Feel free to contact us here or call us anytime at (617)729-2967.