Pros and Cons of Buying Versus Renting
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Determining whether to buy a home or rent can be a tough decision with many factors at play. Would a mortgage really be cheaper than rent? Would it be a better to settle into a home or remain mobile with an apartment? These are a few questions to ask yourself when weighing the pros and cons of buying versus renting.
The Pros of Buying a Home
- More Autonomy: You have more creative freedom with a purchased home than a rented apartment to remodel, make changes, paint and even hang pictures and other decor.
- Build Equity Over Time: The money you pay each month builds your equity and ownership over time.
- Investment Property Potential: You can make improvements and sell the property later on for a profit, or you could rent it out and generate an income.
- Mortgage Payoff: Unlike renting, where you pay rent for the entire tenure of your stay, buying a house means there’s an end in sight. You won’t keep paying forever, and eventually you’ll own the home completely.
The Cons of Buying a Home
- Restricted Flexibility: It’s harder to up-and-move if your circumstances change.
- Additional Homeowners Costs: There are property taxes, homeowners association dues, maintenance costs, etc.
- Large Up-Front Costs: The initial investment can be much higher than the cost of renting, with closing costs, earnest money, inspection costs and more adding up.
- More Work: With a home, you’re in charge of doing the upkeeps and maintenance around the house, or paying someone who can.
- Could Lose Value: Your home could depreciate in value over time, depending on its location and the amount of care and maintenance you put into the home.
The Pros of Renting
- Maintenance is Included: If your water heater bursts or your refrigerator dies, all you have to do is call your landlord to get things fixed.
- Predictable Payments: You know what living in your apartment will cost you each month for the tenure of your lease. No hidden costs or surprises.
- Relocation Flexibility: You remain relatively flexible in your freedom to move if needed. Many landlords allow for a 30 day notice and will keep your initial deposit if you decide to break the lease.
- No Depreciation Risks: The value of your apartment may fluctuate, but that’s not your problem – it’s your landlord’s. Your rent won’t rise for the tenure of your lease.
- Amenities Included: Pool access, a gym and commons area? Yes, please.
The Cons of Renting
- No Ownership: You’re paying every month, but that money isn’t turning into ownership. You’ll never see it again.
- Up-Front Costs: Many apartments require a deposit as well as first month’s rent – a sizeable chunk of funds.
- Pet Rent: If your rental allows for pets, it’s likely they’ll charge you a non-refundable deposit and/or a monthly pet fee.
- Rent Will Likely Rise: After your lease is up, it’s quite possible your landlord will raise the cost of your rent.
- No Autonomy: You have very little creative freedom with how you decorate and furnish your apartment. You must be careful about what you hang on the walls – and forget about painting!
It all comes down to what you value and what you can afford when you’re looking for your new place. For help determining if buying a home is right for you, give us a call today or visit your area branch!