Should You Rent or Buy Your Next Home?
There are several great upsides to renting vs. buying a home, the most significant being flexibility. While you may be tied down for a few months or a year with a lease, after your lease ends, there’s no hassle involved in moving out. This is perfect for people who move frequently or aren’t sure where they’ll be in a few years, because you won’t face penalties for moving after just a year or two.
Another advantage is that renting tends to be cheaper than buying. Apartments tend to be the least expensive rentals, but renting a house is also often cheaper than buying when you consider the fact that you don’t have to pay for a down payment, commission fees, and other costs associated with buying a home.
One major disadvantage when you rent vs. buy a home is that you’re not making an investment. Your rent money helps someone else pay off their mortgage, and, unlike home ownership, you typically don’t end up with any equity in the home even after making payments for years.
When renting, you’re also subject to rising rent costs, especially in cities where real estate prices are skyrocketing. You’re at the mercy of your landlord for the duration of your lease, and if they decide to raise your rent by a few hundred dollars, there’s not much you can do.
The biggest advantage to buying a home is that you’re making a financial investment that will pay off down the road. While there are more upfront costs involved in buying vs. renting, they will be worth it after a few decades when your home is paid off and you can live mortgage-free.
Another attractive aspect of buying a home is that you’re in control of your future. You can sell your home at any time and don’t have to worry about a lease. You also have the freedom to make your home your own, since with many rentals you’re prohibited from making even minor changes.
Of course, there are a few downsides to home ownership, and one of the most significant is the costs. Before you buy, you’ll need to have saved up enough for a down payment, which can be up to 20 percent of the listing price. And if you’re planning on getting a loan, you’ll also need a strong credit score or risk paying more in the long run.
If you buy your home, it’s also recommended that you stay put for at least five to ten years. Between down payments, legal fees, closing costs, and real estate agent commissions, it’s expensive to buy or sell your home, and moving after just a year or two can end up costing you thousands.
Which Is Better?
Choosing whether to rent or buy your home is a personal decision that’s dependent on your lifestyle and financial situation, and there are pros and cons to both options. Renting is perfect for people who want flexibility and affordability, while home ownership is ideal for someone ready to settle down and invest in their future. And when you’re ready to buy, be sure to contact your local real estate office to get a great deal on your dream home.