You have been renting for a long time, but you are starting to think about buying your own home. To help you make that decision, we are giving you the pros and cons of renting vs. owning. Which one is right for you?
According to financial analysts homeowners across the nation pay from 33% to 93% more for housing each month than do renters living in the same state. It has been estimated that the monthly cost of renting is lower than the cost of owning a home. Renting also gives you flexibility and a freedom of choice. If your rent gets too high or your income drops, you can always move somewhere cheaper. You are not tied down to a single property and unless you are planning to live in the same city for many years, renting is the better option. If you are still planning to buy one day, an affordable monthly rent can help you save for a down payment.
Cons of Renting
There are some cons of renting vs. owning that you should also consider. For example, you can get unexpected raises of your monthly rent. Your landlord can also change the conditions of your lease or even cancel it at any time. Even though your monthly housing costs are lower when renting, you don’t have the long-term financial security and stability that homeowners have. While renting you can’t build equity. Whenever you decide to renovate and redecorate you need the landlord’s consent.
Advantages of Homeownership
Homeownership offers a lot of perks that you can’t get while renting. Investing in real estate is more profitable and predictable than other types of investments like putting your money in the stock market. Although it might seem that you are paying more every month, as a homeowner you can deduct mortgage interest and property taxes on your tax returns every year. These savings can make the cost of owning equal or lower to the cost of renting. If you get a fixed-rate mortgage you can not only save a lot of money from rent increases, but you have a sense predictability that only owning can give you. Paying your mortgage is like a savings account and a great way to save for retirement.
Disadvantages of Homeownership
With all its benefits, owning also has some downfalls. Repairs, taxes and insurance add extra cost. You have to save money for upfront payments, such as down payment and appraisal. The majority of your mortgage payment goes towards interest in the first 10 years.