Thinking what’s the better option, owning and renting a home? We talk about the pros and cons to help you make the right decision to live the desired lifestyle.
You’ll find two types of people. One, who looks for short-term success and easily gets bored with their surroundings. Two, who are patient and want stability in their lifestyle. Yes, we’re talking about renting a home and owning it.
This is a hot debate that has been going on for a while now. Whether you should strive hard and save your money for owning a home? Or you should settle for being someone’s tenant by renting a home?
The best way to solve that mystery is by highlighting the positives and negatives of both situations. And that’s what we’ll do right now.
Let's begin.
Renting gives you the ability to easily move from one location to another even after a short period. You don’t have to worry about someone taking over your property lease, as that’ll be a headache for your landlord.
The option of renting would be ideal for people starting their professional careers and looking for residents near their work location. Those are the people who may need to constantly change jobs and renting a home gives them the ease to change their living accommodations as well.
Reviewing and signing so much paperwork can get frustrating. And you need to be very careful when signing those agreements and also have your real estate agent review them. That’s something you can avoid when you want to be a house tenant.
Instead of all the additional formalities when owning a home, you only have to sign a tenancy agreement when renting a home. You don’t even have to deal with insurance agreements as that’s something your landlord needs to sort out.
Owning a home comes after you pay a massive down payment. This can be 2% to 20% of the entire home purchase price. And that’s in addition to the closing cost, which is due when you finalize the deal. This can be 1% to 4% of the total property purchase cost.
Even though there’s an upfront cost involved when renting a home, it’s significantly less than the down payment when buying a home. That can allow you to save a lot of your money when renting a home.
You must’ve heard of occasions when the tenant has their rent increased by the landlord. But here’s the thing, your landlord can’t increase your rent at will. Only when the home lease expires and is renewed, they can change your rent amount.
So, before that happens, you can have a stress-free life as you’ll know exactly how much you need to set aside in your monthly budget. That avoids confusion and helps you plan accordingly.
Leaking pipes, deteriorating roofs, malfunctioning appliances, and more, are just some of your home maintenance expenses when owning a home. You can escape these expenses when renting a home, as your landlord has to pay for them. You can save a lot of money by renting a home.
And that’s not all. In some rental deals, expenses like electricity and other facilities are also covered by the landlord when renting a home.
Explore: Discover Your Next Rental Property
Remember when we said you can move out at very short notice without many formalities? That goes both ways. Your landlord can also force you out without enough time to search for a new home.
Even if your landlord doesn’t make you vacate the home, it’s no guarantee that your lease agreement will be renewed or not. So, you’d always be at risk to lose your living accommodation when renting a home.
You’d ideally want your home to look and feel according to your preferences. Unfortunately, you don’t have that option when renting a home. For even minor changes, you’ll need to seek approval from your landlord.
That can be a roadblock in living and enjoying the life you desire, as you’re living on your landlord’s terms.
Owning a home comes with numerous benefits and perks. These include tax advantages, energy-efficient reimbursements, and access to credit easily. But when you rent a home, you’re deprived of such financial incentive opportunities.
Yes. You’ll be able to build your credit score for future benefits. But for availing of these advantages, you’ll have to be a homeowner.
It’s certain that when you own a home, no one can knock on your door and legally force you out. If you’re paying your mortgage and taking care of the necessary homeowner expenses, you stay in your home for as long as you want without property foreclosure.
You won’t have to think, “The landlord or anyone will ask me to vacate the home.” Why? Because you’re the new property landlord after you’ve gone through the home buying process and bought the home.
To develop an attachment to your home and feel good about where you’re living, you’ll need to personalize it. As we’ve mentioned, that’s not possible when you’re renting a home. But when you’re owning a home, it becomes easier.
You’ll have the freedom to completely remodel and restructure your home as per your preferences and desires. This includes things like changing the position of your home appliances, upgrading your furniture, or improving your exterior with grass and granary.
You’d want your home to reflect your personality and impress the guests you come for a visit.
Just be sure to check for any housing society layout bylaws before going all out with your creativity.
We’ve told you that you can’t avail yourself of tax benefits when renting a home. But owning a home makes it easier and simpler. When you close the deal, you’re now an official homeowner, eligible to tax benefits.
These include deductions in your property tax, income tax, and more. So, when you’re owning a home, you can cut down your taxable income and save a lot of money.
As you pay off your mortgage and reduce the difference between the property value and your equity, you can build your equity for future use.
Having a significant home equity increases your borrowing power and helps you approve loans at favorable terms. These include accessing home equity loan and line of credit.
Like everything around us, the real estate industry is also unpredictable. But if we look at history, home value usually appreciate. That’s what you can look forward to when you’re buying a home.
When it’s time to sell it, and the prices appreciate, you’re looking at a high-profit deal. Apart from the external factors, various factors can impact your home's resale value.
Learn More: Check out a Property For Sale Near You
Apart from the home purchase value and mortgage payment for so many years, owning a home requires you to pay a high upfront cost. These include the closing cost and down payment, which are a significant investments.
That means you have to save your finances from the start and budget accordingly.
If you think buying a house was a challenge, selling it can be an even bigger ask. Not only do you want to fix the home maintenance issues, but you also need to find a willing party that’s interested in buying your property.
As we’ve said, buying a home isn’t a cheap investment. So meeting ends meet by finding a person that ticks many boxes like your house matches their preference, is within their budget, in the right location.
Have you ever lived as a tenant somewhere? If so, yes, it must’ve gotten frustrating to not be able to make the home renovations and upgrades without your landlord’s approval. But at the same time, the positive of having a landlord is that they’re responsible for all maintenance.
That’s not a perk you can enjoy when owning a home. You need to bear all home maintenance expenses. That means when you’re creating a monthly home expenses budget, a large percentage of your cost will so in home maintenance costs.
So, who won this battle? Well, it’s a tie, and here’s why. Deciding whether you want to invest in owning a home or renting a home depends on your preference and expectations.
If you constantly switch between locations and want to reduce the cost, renting a home can be the right idea. If you’re looking to make your house more eye-catching and willing to wait for the home value to increase, owning a home is the option for you.
Either way, whatever you choose, HAR is there for you to assist in finding your ideal home.
Renting offers advantages like flexibility, fewer formalities, lower upfront costs, fixed rent amounts, and reduced home maintenance expenses. It is a suitable choice for those who prioritize mobility and prefer a more straightforward living arrangement.
Disadvantages of renting include unstable arrangements, limitations on personalization, no homeowner financial incentives, and the risk of potential lease non-renewal. Renters have fewer opportunities for tax benefits and building equity in their residence.
Owning a home offers benefits such as stable living arrangements, personalization capabilities, tax benefits, building equity, and the potential for a profitable asset as property values appreciate over time. It provides a sense of ownership and control over your living space.
Disadvantages of owning a home include high initial investment costs, a long-term commitment, high maintenance expenses, and the responsibility for all home repairs and upkeep. Selling a home can be challenging, and homeowners must budget for maintenance and ongoing expenses.
The choice between renting and owning a home depends on individual preferences and circumstances. Renting offers flexibility and lower upfront costs, making it suitable for those who frequently relocate. Owning a home provides stability, personalization, tax benefits, and the potential for building equity. Ultimately, the decision should align with your lifestyle and financial goals.
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