It is a common question, even a common debate about which is better—buying a home or renting. There are advantages and disadvantages associated with each which inevitably leads to debate. The right answer will come from evaluating the pros and cons and seeing which fits best with your needs both current and future.
Home Buying Vs Renting: The Cost
The first thing most consumers are concerned about is cost; the cost each month to live in a specific home, apartment, townhome or condo. In this case, it is generally cheaper to rent than it is to own. Those who favor renting, do so because the rent is cheaper than a mortgage, or, they can rent a nicer place for the same cost of owning a lesser abode. A mortgage is higher because it includes interest payments and payments to escrow for property taxes and insurance.
Home Buying Vs Renting: The Investment
Those who favor owning rather than renting do so because of the investment component. It is simply the better financial decision according to many because you are actually getting something for your money. The money you spend on rent is gone at the end of the month. The money you put toward a mortgage is invested in the property and you can use that investment as collateral or, if you sell the home, get money in hand for your equity. A home and the land on which is stands will usually, given enough time and maintenance, increase in value, so that you can actually make money in the long run if the economy cooperates.
Home Buying Vs Renting: Responsibility and Commitment
There is a much higher level of responsibility and commitment to owning a home rather than renting. For some this is a positive and others this is a negative. You may rent for only a year or 6 months at a time and then you can move on if you are not happy or if life plans change. That is not so easy if you own a home. If you own a home, you must maintain it and you are responsible for repairs and upkeep. When renting, you can just call the landlord with any problems. Of course, if you do own the home, you have much more freedom to fix it up and do with it what you wish.
Home Buying Vs Renting: Homeowners Insurance Vs Renters Insurance
Whether you are renting or owning, you are going to need insurance. As a home owner, you will be required to get homeowners insurance by your lender. If a renter, you will most likely (but not certainly) be required to purchase renters insurance. Homeowners insurance is more extensive and thus more expensive than renters insurance. However, depending upon where you live, your liability may be more if you are renting. For instance, if you live in a large apartment building, the potential damage done by a fire started in your apartment can mean hundreds of thousands, even millions of dollars in damages and thus a higher cost of liability coverage.
Home Buying Vs Renting: The Final Decision
The final decision comes down to your needs. If you are ready to settle down in an area, have a steady income and are willing to take on the responsibility of owning a home, then it is a sound decision to make a purchase. If you are always on the move from city to city, even job to job, renting may be your best bet until you get settled. If you don’t think you can handle the responsibility of maintaining your home, then you should consider renting. Before making your final decision, you should crunch the numbers and decide which makes the most financial since to you.