Is it Better to Buy or Rent in this Troubled Economy
Many people struggle over the choice between buying and renting a home, and with foreclosures and upside down mortgages (owing the bank more than the house is worth) prevalent in the news opting for one or the other has become more difficult.
On the one hand buying could be the right way to go because home prices have plummeted over the recent years. On the other hand you must have enough money for a down payment even if the home is selling for a cheaper price. With that being said let’s list the pros and cons of buying a home.
- When you make payments on your mortgage you are building equity, which is like investing.
- Tax benefits – talk to your tax preparer regarding taxes that are deductable.
- The ability to alter or decorate your house the way you want it.
- You get a sense of pride and community in owning a home.
- The threat of foreclosure is always there if you can’t make your payments.
- You don’t have the freedom to just pick up and move somewhere else.
- Responsible for maintaining the house and yard, or you will have to spend money to get someone to maintain it for you.
- You will be accountable for paying property taxes.
- Renting a place gives you the freedom to move out if you don’t like the neighborhood or can’t get along with the landlord.
There are also other pros when renting but also cons.
- You are not responsible for maintaining the premises.
- No large down payment or fees paid out to real estate agents, lenders and various other fees.
- You won’t be paying assorted insurance costs like property, flood and others.
- If you rent for a long period of time you are not building equity.
- When renting over many years you may end up paying more per month (considering yearly increases in rent) than a person paying off a mortgage.
- If you decide to rent you won’t enjoy the tax benefits of owning a home.
- The landlord you are renting from is not timely with maintaining your home or apartment.
There are good and bad aspects to owning and renting. The most important thing to consider is money. If you are leaning toward buying a home then you must have the financial capacity to make a reasonable down payment and earn enough money to meet your mortgage requirements in a timely manner. If you can’t do those things then buying may not be for you, especially if you can’t find a house you are happy with and can afford.