Should I rent or buy? It’s a question many people ask themselves. How can you know which option is better for you? How do you even go about making this decision?
Renting vs. Buying
I wish I could say that there was one right answer here, but unfortunately that’s not the case. It depends on each individual situation and what’s going to work best for each person.
But I will help you out a little bit. I’ll break down each option and the pros and cons of each. This way you can decide which sounds like a better fit for you!
1. You get a place to live. I know some people think that renting is a waste of money, but think about it for a minute… Frankly, not everyone can afford to buy a home, and renting allows them to have a place to live!
2. You don’t have to pay for repairs or home maintenance. These costs can add up fast, and if you owned a home, you’d be responsible for all those costs.
3. You have freedom to move whenever and wherever. Now, there are rental contracts, but these usually don’t last that long, and sometimes you can get out of them by paying a fee. Essentially, you can up and move when you feel like it.
4. Moving can be easier. You don’t have to worry about selling the property when you move.
1. The money doesn’t go into any equity. After paying rent for years and years, you’re not any closer to owning anything.
2. Landlords have the final say. Want a dog? Some landlords say no. Want to stay another year? Sometimes landlords have have other plans and you have to move out. What the landlord says goes, no question, no argument.
3. It can be difficult to plant your roots. Although some people can get lucky and stay in a rental location for years, that’s not always the case. With the freedom to up and move whenever you want, it can be more difficult to really settle down.
When You Should Rent Instead of Buy
If you’re not planning on staying in a place for very long, renting is definitely the best option. You won’t have to worry about selling the property or dealing with lenders and other people in the buying/selling process for the little time you’re there.
If your credit is suffering or you don’t have money for a down payment and other costs that come with buying a home, renting is a good option while you wait until you’re more ready to buy.
1. Your payments go toward equity. Eventually, once you own your home free and clear, you won’t have to pay for a place to live anymore.
2. You have the potential to make money when you move. If you had some equity in your home, and you’re able to get a good offer, you can actually make money on your move.
Keep in mind that homes usually increase in value over the years as well (a lot of factors play into this, so it’s not a guarantee), so there is potential to make some money on the sale.
3. There’s the possibility to get money back from taxes thanks to a mortgage deduction. Although some cases vary, this is a possibility.
4. It’s the American dream. Some people are questioning this. Is it really the American dream? Has this changed? I don’t know if I can answer that for you, but I can say that having a place to call your own is a great feeling and something you just can’t get any other way.
1. You’re responsible for all the homeowner expenses. This includes taxes, fees (HOA fees for example) and any repairs or home maintenance projects. This means you have to pay for it, and you have to either do it yourself or find someone else to do it.
2. If you want to sell, it can be a hassle listing the property and waiting for the right offer.
3. The initial cost of buying a home can get expensive. With a down payment, closing costs and other miscellaneous fees, you can be out quite a bit of money. (This may not be fun, but it’s not the end of the world either. Remember why you’re doing it. This is so you can live the American dream of owning a home.)
When You Should Buy Instead of Rent
If you’re planning on staying in an area for a long time (and you have the financial security to do so), buying is the best option. Your money is going toward something you own. If you stay there long enough, you won’t have to pay for a place to live!
If you’re ready to settle down (and, again, you’re financially able to do so), buying a home can provide some stability. Let yourself grow some roots.
So, while I can’t tell you whether you should rent or buy, I will tell you that there are pros and cons to both. You’ll just have to decide which ones you want to deal with.
Which is the best option for you?! Do you want the freedom of renting so you can jump from place to place, or do you want to live the traditional “American dream”?
Call Sun American Mortgage Company to see what home loan options are available, and get pre-qualified today!
For some more insight on renting vs. buying, check out these articles:
The New York Times: “Is it Better to Rent or Buy?”
Fidelity: “Should You Buy a Home or Keep Renting?”
Mr. Money Mustache: “Rent vs. Buy: If you Have to Ask, You Should Probably Rent”