In our society, one of the biggest decisions we make in our lives is whether to buy or rent a home. It's always a difficult question to answer, and everyone seems to have their subjective point of view. Since every person has a different situation, laying out the pros and cons of both options can help you make an informed decision. Keep reading to find out which works best for you
- Building Equity - As you pay down your mortgage, you get to build equity as long as your house maintains value.
- Make it Your Home - If you’re the kind of person that likes change or want something oddly particular, buying a house gives you the freedom to re-decorate, rebuild and remodel your home however you wish.
- It’s an Investment - Real estate is one of the most popular kinds of investments. If you buy a home and choose to leave it in the future, you can always rent it out rather than selling. Moreover, when you pay off your mortgage, the house is yours. Thus, in a stable (or even better, booming) market it could be worth far more than what you bought it, yielding a satisfying profit in the grander scheme.
- Less Flexibility - For the people that like to move a lot, when you buy a house you’re essentially making a long term commitment to stay put. Currently, it's a buyers’ market out there so selling a home is a lot more complicated and costly than one might think.
- Maintenance - People forget their homes are not invincible. Everything eventually ages and needs to be replaced, and if you’re not as handy like yours truly, there is a hefty service charge for all the manual labor that goes along with it.
- Property Tax - Sure, comparatively to the other two cons, this is a little bit of a stretch. Though the various taxes add-up to be a burden.
- Avoiding a Depreciating Asset - Although home prices have stabilized in most housing markets, there is no assurance it won’t collapse again. Although, the possibility is unlikely (for now) you can rest assured another 2007-2008 won’t affect you as much.
- Zero Maintenance Expenses - To upkeep a home is always relatively costly; it can be anything from infrastructure to a faulty shower knob. When you rent you’ve automatically released yourself from that responsibility, all it takes is a call to your landlord.
- Flexibility to Move - Normally, Leases go for a year or two, and even those could be broken for a fee or even sub-leased, leaving you commitment-free. That's great if you’re the kind of person that likes to move now and then.
- No Tax Benefits - Whether its tax breaks or a little extra cash, every municipality has some tax benefit for homeowners. However, if you’re a renter, none of these municipal benefits, which are designed specifically to encourage home-ownership, will apply to you.
- Can't remodel without permission - In almost all cases if you are renting, you're not allowed to remodel your home. In some cases even repainting your place requires the landlord's permission.
- Although there is a finite amount rent can soar every year, there is always a chance it can (and it will). To rent means, you’ll have to adjust your budgeting for the coming year.
The bottom-line for whether you want to buy or rent comes down to one main factor, budget, essentially the tie breaker that’ll end up making the decision for you.