To Rent or To Buy? Here’s a List of Pros & Cons!

While most people will say that they aspire to homeownership and that it is one of their long-term goals. This is partly because we’ve been bombarded with the message that being a homeowner is the key to happiness and part of what it means to be successful. Real estate is also big business for everyone, from mortgage lenders to real estate agents to home improvement stores. It is a part of our cultural mindset and economy. However, it’s important to remember that owning a home isn’t always better than renting, and renting is not always as simple as it seems. 

How do you know if homeownership is right for you at this point in time or whether you should continue renting?  You consider both options to figure out whether renting or owning is best. In this article, we hope to help you weigh the pros and cons of renting versus owning.

Advantages of Buying a Home

Fewer Restrictions
When you own your own home, you do not have to consult a landlord for permission to make changes. You can have a pet if you want to. You can have guests or even rent it out. You will have more creative freedom to paint your walls, build a patio, replace old windows, update fixtures, etc.

Building Equity
You may also be able to increase the amount of your home’s value with home improvements such as paving a driveway, adding a garage, or redesigning the outdoor space to add curb appeal. Even small changes can have an impact on the value of your home. Owning a home also allows you a great opportunity to generate income by putting it up for rent. If you have some vacant space, you can simply rent it out and earn some extra money while maintaining ownership. 

Cost Benefits
Surprisingly, many times the monthly cost of owning a home can be less expensive than renting. Moreover, while years of payments on the home loan that you took out is a long time, you are constantly building equity for use in retirement.

Property Improvements
As a homeowner you will no longer be dependent upon a landlord to fix items or maintain your property. Not only will you have a choice over which items are replaced or added, but you will be able to do them on your own schedule.

Disadvantages of Buying a Home

Initial Costs
When you buy a home, a sizable amount of money will be needed for the initial down payment, closing and insurance costs. This sum can seem like a formidable amount of money, equaling several months’ or even a year’s worth of rent. 

Hidden Costs
As the saying goes, owning a home comes with a lot of responsibilities. Whether you are buying a recently-constructed house or an old one, you are bound to face maintenance and repair issues popping up within the first few months of purchasing the property. From updating the light fixtures to fixing pipe leaks, homeowners need to bear the cost of all major and minor renovation work all by themselves. Of course, you can save up some money by going the DIY route, but you can also end up making things even worse. 

Loss of Mobility
As opposed to renting a home, buying one limits your options to move around or explore job opportunities in different cities. While a tenant can leave their home after serving a notice to their landlord, a homeowner needs to go through an extensive number of steps to put their house up for sale. They also need to wait patiently as potential buyers visit the property and negotiate the selling price before finally reaching an agreement. This can take up to a few months at the very least.

Potential for a Financial Loss
Equity in your home does not automatically equate to profit. If the value of your home decreases during your time as a homeowner, then your financial gain might also decrease. Generally, the value of houses and buildings depreciates over time due to old construction style, outdated design and general wear and tear. This means in order to flip the house for a profit, you’ll first need to invest money and time into upgrading it.

Ownership Advantages Ownership Disadvantages
Fewer Restrictions
Building Equity
Cost Benefits: Lower Monthly Costs & Retirement Relief 
Initial Costs
Hidden Costs
Loss of Mobility 
Potential for a financial loss

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