Have you reached a fork in the road in your life? Is it time to decide whether you want to buy a home outright or simply rent for the time being?
Many people who reach this critical stage in life when they consider renting vs. owning a home have difficulties weighing their options. Owning a home seems to come with so many benefits, but renting a home seems so much simpler!
If you need help making your decision, keep reading. Today, we'll cover some of the many benefits provided by both renting and owning a home.
Pros and Cons of Buying a House
First, let's look at why home ownership may be a better idea vs. renting.
Pros of Owning
When the property you live in is yours, you never have to worry about a landlord coming by to inspect the property, and you'll never face a change in terms or ownership. As a renter, you are 100% at the mercy of fate -- so you'd better hope the owner doesn't feel like tearing the place down.
If you own your home, you'll be able to deduct a lot of related expenses. Unless you owe a huge amount of money (over $1 million), you'll be able to deduct all the interest you pay to your mortgage payment.
Your monthly payment won't be changing anytime soon. In fact, unless you have a hand in changing the cost of your mortgage payment, you'll probably pay the same rate for the duration of the note. This can help tremendously with smart budgeting!
Owning a home is one of the best investments a person can make these days -- especially since it happens so rarely now with the younger generations. Your portfolio will look much, much better if you own for years instead of spending all your time throwing away cash in rentals.
Cons of Buying
As a homeowner, you are responsible for any repairs and all utility bills for the home. Renters generally don't need to cover all of these things. You must budget money to cover often-unexpected things such as:
- Pest control
- Tree removal
- Plumbing or electrician costs
You will also pay for property taxes as well as insurance, and property taxes can rise without warning for homeowners. In addition to home insurance, you may be required to purchase flood or earthquake insurance, depending on where you live in Texas or Oklahoma.
You risk losing money on your investment when you buy, too. While many properties gain value after you purchase them, sometimes they decrease in value. A small number of homeowners end up owing more on their mortgage than the property is worth, putting them "underwater" on the purchase. You could also put money into home repairs or improvements that do not increase the value of the home.
Pros of Renting
When you rent an apartment or a home, you can always leave at the end of any lease agreement or even pay to break a lease in many cases. If a new opportunity presents itself, you can pull up your stakes and take off wherever you like. If you own, you'll have to wait for the house to sell or for an acceptable renter to come along.
Renting may require a small security deposit at the beginning of your lease, but it's nothing compared to the huge cash deposits most homeowners are forced to make on their mortgages. That means you can hold onto that money and build up a decent amount of cash for the next time you need to move.
If something breaks (like your air conditioning, appliances, garage door, etc.), all you have to do is pick up the phone and give your landlord a call. It's their responsibility to keep your rental home livable, not yours. When you own, it's all up to you.
When you are trying to decide what's better, owning or renting a home, you should also consider that your bills will be fixed when you rent. While rent itself can increase, you don't have to cover unexpected repairs. You will likely have an easier time budgeting when you rent.
Cons of Renting
When you rent a home, you put money monthly toward something that you will not earn you any long-term benefits. You will never own the property, and you can't take mortgage-related tax deductions. In most cases, your rent will be substantially lower than a monthly mortgage payment, which makes renting a better option for some low-income earners. But many people prefer to put money into something they will one day own outright, even if that means making more significant payments.
Some people prefer the control you get when you buy a house, too. When you rent, you are often at the mercy of your landlord, and they can:
- Decide when to make repairs
- Raise the rent
- Enact restrictions on usage of public spaces within the rental facility
As a renter, you have very little power. You can make suggestions to your landlord, but they may not follow your guidance. Many landlords fix things as soon as they break, but others may take their time addressing your concerns.
Should I Buy a House or Rent: Factors to Consider
If you're young (in your early twenties), you might not want to try purchasing a home unless you have a seriously lucrative, stable job. The nature of youth means you never know what might change year to year, and locking yourself into a long-term ownership plan might be something you eventually regret.
If you have a middling credit score, owning a home can be much better for your credit than renting. The vast majority of the time, renting a home does little to nothing to affect your credit score, while successfully paying off a mortgage is great for your credit.
The housing market, particularly that of your local area, is probably the biggest thing to consider if you're weighing your options. If it's a buyer's market, you might find some phenomenal deals on properties near you. If it's a seller's market, you may not have any real options in your price range and may be forced to rent anyway.
Ultimately, the decision of whether or not you should buy or rent a home is up to your specific financial and life situation. As our renting vs. buying pros and cons make clear, the right answer will vary from person to person. Whatever you choose, make sure it's the right choice to help you build yourself up in the right direction for years to come.
Apply for a Personal Loan With Atlas Credit
And as always, if you need some extra help making a rent payment, putting down a deposit, or simply making some repairs (if you own, that is!), apply online or in store for a personal loan of up to $1,400 from Atlas Credit today! You can visit any of our locations across Texas and Oklahoma or apply online. Our friendly representatives can discuss your loan options and help you see if renting vs. buying a house makes sense for you.