Renting vs. Owning
There are many factors to weigh when considering renting versus owning a home. Each choice provides great benefits, but deciding which is better requires borrowers to conduct research, examine their financial situation, review potential lifestyles changes (family additions, job changes, and so on) and long-term goals that could impact living arrangements.
Renters are responsible only for paying the monthly payment as stipulated by the contract, paying for utilities (power, and sometimes water) and for limited kinds of maintenance to the property. Renting can also allow a tenant to build up savings, as investment into the property is minimal. These factors are a plus for tenants whose lifestyles do not allow them to purchase a home or whose incomes do not allow them to afford a mortgage loan.
Although renting requires less responsibility and provides flexibility, it has its disadvantages too. Renters do not earn equity in the home and are not able to reap the tax incentives or equity earned on the home. Also, annual rent increases can put the rent out of your comfort zone as well as decisions made by the property owner, who may decide to increase rent..
Home ownership provides several benefits, including a sense of stability and security. As a tax benefit, owners are able to write off mortgage interest and taxes paid on the home on their income taxes. Owners earn equity in their home and can create some financial security.
Special considerations:. Owning a home requires a significant investment, including securing the mortgage loan (with the down payment, home inspection and any other associated fees), and paying property taxes. You also need to maintain the property and make home repairs. These costs add up and can be financially challenging if you are not prepared for them. If an owner wants to relocate, doing so will require that he sell the property. This can be quite a daunting task if the market is not favorable.
If choosing to purchase, the buyer should review all costs associated with the initial investment and have savings or a savings plan in place to help cover unexpected costs. If choosing to rent, the renter should make monthly investments in a savings plan. Investing money for the future can help make a transition from renter to homeowner a dream come true.