Is it right to Rent or Buy?
For most people, buying a home is the biggest financial decision they will face. Which is really the better deal? Is it better to be an owner or a tenant?
The first question I would ask is – what are your personal and financial goals and what resources do you currently have to reach those goals.
In addition to general preference, this question largely depends on your current capability and willingness to absorb short term expenses for the potential for acquiring wealth in the long term. Let’s walk through some of the pros and cons of each.
Below are the advantages and disadvantages of renting and buying.
- Owning a home can benefit your credit, security and equity.
- Your house and lot value when maintained well has a great potential of appreciating rather than depreciating.
- You can lease it for passive income.
- You have the freedom to make the house your home and can choose to alter any exterior and interior features.
- Homeownership comes with many expenses. Not only do you have to consider about the purchase price, but you also have to think about the cost of maintenance, association dues, and property taxes.
- Buying a home is bigger time commitment than renting, as most owners will have to go throught the process of selling their home before relocating.
- Lesser responsibility compared to being the owner of the house.
- Short term renting commitment compared to a 30 years conventional home loan..
- Renting allows affordable options in higher end communities where buying a home may be out of budget.
- Renting often only provides short term options compared to buying a home which means you could be packing up more often than you would like to be!
- At times, renting can be more expensive than paying the mortgage.
- Your decorating and creativity may be limited by your landlord
Most people fall onto either side of the aisle at one point another on their life’s journey. What is the best choice for you?