The Decision of Renting vs Buying a House
There comes a time for some when they finally are ready to take the big leap of leaving that 800-sf apartment behind for an actual home. There could be numerous reasons why one is ready to start living this lifestyle. We will go over some factors of whether making that big purchase on a home would fit you or if renting would be the route.
What are your intentions for deciding to move into a home? Are you looking to permanently stay in a location or are you just testing the waters of being in a city for a short period of time. Figuring out your purpose of renting or purchasing a home will make this decision easier. If you plan on staying in a location less than five years, you may want to rent a property instead of leaping into a purchase.
Laying down roots for purchasing a home is a massive commitment. You are going through a potentially lengthy process of finding the perfect home. Are you wanting a new build or a potential fixer upper with a list of needs and wants. It can be a daunting feeling when committing to a purchase, but you will reap the reward of owning your own home when purchasing.
So many scenarios are in the mix when deciding to just be on a year-to-year basis with a rental or that 10–15-year mortgage commitment.
Renting allows you to be mobile, it doesn’t require much investment on your part. It’s easy for someone who wants some flexibility in their lifestyle.
Purchasing a home will entail closing costs, property taxes, a down payment, homeowners’ insurance, and the list goes on. You will have an initial large payment upfront for a purchase of a home, compared to a deposit and monthly rent when renting. A down payment for a house is more expensive than your initial deposit for an apartment. The down payment is usually expressed as a percentage of the total price of the house, which can range from 5% to 20%. In addition to paying this amount up front, you’ll also need to pay monthly mortgage payments and taxes (if applicable).
The selling price of your property will be used as another method for determining how much money you should put into escrow when purchasing it. This number represents how much equity has been built up over time—and thus how much equity remains if anything were to happen like having another person move in or sell out before moving into their own place!
You also need to take into account having to pay for expenses out of your own pocket when it comes to owning a home. Is this a responsibility that you want to take on or would you rather leave it up to the landlord to handle the routine maintenance for a rental. Renting provides you with a predictable and consistent housing cost. You know what you’re paying each month, and it’s not something that can be changed by surprise. This makes it easier to budget for rent than if your monthly payment were dependent on something more variable like home equity or selling the house (which would normally be used toward other debts).
It’s possible that renting would be cheaper initially, but after some years of owning a home, you will have the opportunity to build equity of your purchase. If you ever wanted to sell after years of owning your home, you could come out on top with a larger return. Purchasing may not be an option for some, you may not have enough for the down payment at the time and would then need to continue to save before making that step into ownership.
Renting allows people who want to move around more easily and live where they want without worrying about owning property (or paying off bills). It also allows those who don’t have much money but still want an affordable place in town where they can feel safe and secure.
Home ownership provides a sense of stability and pride of ownership. You can use your home as collateral for a loan to buy other things (cars or boats) or to pay off debts you have. Also, if you ever sell your home at a profit, it’ll be taxed differently than it would be if you bought it on credit or rent. The difference between what taxes are paid on property and income can mean tens of thousands of dollars in savings over time. This decision will ultimately come down to your personal choice and finances of what you are capable of doing. Take into account and consider your factors of what fits your best when seeking a home.