Increasing apartment rents and very low rates of mortgage rates in several cities have compelled many individuals to buy houses quickly than they had actually planned. However, few others prefer to wait till the housing market regains, despite the incentives to purchase at a time when there are lot of great deals on the offer. The actual fact is that there is no correct answer as far as deciding whether to rent or buy a house. There are several aspects to consider when deciding this.
Buying and renting have their own share of advantages and disadvantages and your own financial condition may be the greatest factor to determine the better choice in your case. So, understanding the pros and cons of both the conditions will help you make a well-informed decision.
Pros and Cons of Purchasing a Home
Owning a home is not for everyone, though there are few emotional and financial benefits that can be enticing.
- Once you make a decision to settle down in a community, you will most probably get more engaged in a community since you will be sure that you will reside there for many years. You can possibly join an association of home owners, volunteer for community beneficial projects and also get to know your neighbors well.
- You can use your house as an investment. If you purchase a house and opt to vacate it, you can rent it out instead of selling. This can help to generate some extra income. If you are paying your loans with this, it turns out to be even beneficial.
- Apart from the above advantages, you can benefit from tax breaks for house owners, build equity, make stable housing payments, and finally you can decorate your place as you please.
- As a house owner, you will have to pay money and spend time in order to maintain your property in good condition. You will have to set aside some money for unexpected expenditures like a service agreement for your furnace or appliances that get damaged. You will also have to set aside funds for paying property taxes, and house owner’s insurance
- Your house is an illiquid asset. If you have to sell your home due to relocation, it may not be a quick process. Moreover, you may also not be able to sell it for as much funds as you want due to depreciating house value.
- Purchasing a house needs investment of funds. You will have to exhaust a big part of your saving for making a down payment. As a result, this cash will not be available for other kinds of investments.
Pros and Cons of Renting a Property
In spite of the fact that you cannot build equity, renting gives you utmost flexibility and freedom, particularly if you are on a monthly lease.
- Though the prices of houses has stabilized and are increasing in most of the housing markets, there is no assurance that your house will increase in terms of value over time.
- It is easier to relocate in the near future without the hassles of selling the property.
- The maintenance part is taken care of by the landlord in most cases, ruling out stress for you.
- The monthly rents can increase over time. You’ll end up paying a big part of your monthly income just for your house rent.
- There is no need to build equity. When renting a house, you only get a place to reside in, but there’s no asset as such to sell when you are all set to move.
- You cannot remodel the house without the approval of the landlord. In most cases, when you find a property to rent, you will have use it as it is without any remodeling according to your likes.
On the whole, whether buying a property is better than renting depends on several factors, especially how quick the rents and prices increase and how long you reside in your home.