Whether your current lease is up you’re moving for a job, or you’ve had a change in your life such as getting married, the age-old question is when is it better to rent and when is it better to buy?
There are a lot of things to consider from your preferences and the conveniences that can come with renting, to how long you plan on staying in one place. The following are some things to keep in mind if you’re at a point where you’re deciding to rent or buy.
There area lot of financial considerations to keep in mind as you compare renting versus buying, but there’s more to it than that. Some people like the idea of owning and maintaining a home, but for others, that can seem like unneeded stress that they don’t want to take on. In fact, there is an increasing number of people who buy a home and then ultimately go back to renting because they find it doesn’t suit them.
In an apartment community or rental, there are a variety of amenities and services like trash pick-up and on-demand maintenance. You don’t have to worry about the lawn, and if something breaks,you just let your landlord know.
If you’re not ready to give up those conveniences, it may be better for you to keep renting.
If you rent a home, you can plan and budget because the costs are going to be fixed each month. Your rent should stay the same throughout the duration of your lease,and it will often include things like utilities and maybe even cable and internet. Of course, your rent can go up at the end of your lease if you want to renew, but still, you can plan for most costs.
On the other hand, when you buy, you might know the costs of your mortgage and utilities,but you have no way to know how muchunexpected costs you might be paying. For example, what if a pipe bursts? You can’t budget for unexpected emergencies that can come up when you own a home.
The Pros and Cons of Buying
Along with what’s already named above, there are other pros and also cons of buying a home. Pros include the fact that you can customize your home and have it the way you want it, and you don’t have to answer to a landlord. You can also build credit and equity when you buy, and you have stability. Buying a home is an asset that,in many cases, goes up in value over time.
On the other hand, there are disadvantages. For example, it requires a lot of upfront money,and it can take a long time to get everything to buy a home. If your home goes down in value, you could lose money too.
The Pros and Cons of Renting
One of the big pros of renting is that there are few if any upfront costs, and it’s a much easier process. You could theoretically rent a home in one day. It also gives you more freedom to move around if you choose, and you don’t have to worry about things like the value of your home declining. You don’t have any property tax bills either.
The downsides of renting include the fact that you’re not building equity, there are no tax benefits,and you may be forced to move based on situations out of your control.
When Should You Buy?
If you are planning to stay put for more than a few years, and you can qualify for a prime rate mortgage and affordable monthly payments, you might think about buying. Also, if you like the idea of taking on projects and you can buy a cheaper fixer-upper and improve it over time, buying might be good for you.
If your life is at a point where it’s not very stable and your job, location,or family situation could change in the relatively near future, renting may be better. Also, if you could have fluctuations in your finances coming up, renting could be better because it gives you more flexibility to make a change if necessary.
If you don’t have money saved up for a down payment for emergency repairs a home might need, it’s another case where renting is likely your better option.
Renting is sometimes looked at as a negative thing, but that’s not necessarily the case, and for people in certain situations it can have advantages.