Your best friend recently purchased a home. But your close family friend opted to rent a home. And the contradictory actions leave you wondering whether you should rent or buy a home. Homeownership is a major financial decision that has a significant impact on your lifestyle. However, whether you go for rent or buy a home, it all comes down to what you can afford. Are you financially stable enough to purchase a home, or does renting seem like a viable option given your current financial position? Let’s compare the two homeownership options, renting or buying a home, and figure out which one is the right choice for you.
Renting A Home – Pros And Cons
As you compare between renting and buying a home, it’s essential for you to know the pros and cons of each choice. Hence we share some of the pros and cons of renting a home.
Pros Of Renting A Home
When you opt for a rental property, you can enjoy better flexibility compared to buying a home. Since renting a home is a shorter commitment, it gives you the flexibility to relocate to another home on shorter notice. Moreover, you don’t have to worry about finding someone else who can move into the same property with a rental home.
Given the increased flexibility of renting a home, it is an excellent choice for young professionals who might require to stay in different areas or cities due to their professional commitment.
Opportunities For A Luxurious Lifestyle
Do you want to live in an upscale housing society that offers a luxurious lifestyle? But you can’t afford to buy property in that neighborhood right now. In that case, renting makes a viable option as it allows you to enjoy the amenities even if you have limited funds.
No Or Little Home Maintenance Cost
You don’t have to worry about home maintenance when you rent a home because your landlord can take care of it. You may be required to pay a certain amount specified in the tenancy agreement, but the amount is much lesser than the actual repair and maintenance cost.
Needless to say, when you rent a home, there is much lesser paperwork compared to when buying a home. You may still have to sign the tenancy agreement, but there is little or no more documentation.
Cons Of Renting A Home
While there are several benefits of renting a home, below are a few cons associated with the decision.
No Increase in Equity
You pay hundreds and thousands of dollars every year as rent, but there is no increase in equity at the end of the day because you still don’t have a claim on the property.
Increment in Rent
When you sign a tenancy agreement, you agree to the monthly amount you must pay as rent. However, once it’s time to renew the tenancy agreement, your landlord can increase the rental amount without prior notice.
Adherence to Rules
While living in a rental property gives you flexibility, it comes with a few rules that you have to adhere to. For example, tenants cannot remodel or renovate the house. Moreover, some landlords do not prefer pets inside their homes, so you need to stick to their rules as a tenant.
Moving to a New Home
One of the significant costs associated with renting a home is the cost of moving to a new home. If your landlord wants you to relocate for any reason, you will have to pack and pay for the moving costs. Moreover, before you leave, you will also have to clear the utility expenses and pay for the down payment of your new property.
Buying A Home – Pros and Cons
Now that you already know the pros and cons of renting a home let’s look at the pros and cons of buying a home that is an American dream.
Pros Of Buying A Home
Owning a home brings you a sense of security as it is an addition to your equity. When you pay mortgage payments, you are securing your property that turns out to be your asset.
Moreover, you also don’t have to worry about a sudden increase in the rent that gives you peace of mind.
No Rules And Restrictions
Unlike renting a home which comes with several rules and regulations from the landlord, owning a home gives you complete freedom. You can renovate and decorate your home the way you like and even have pets at your home.
When you own a home and have some extra space, you can also rent it out to generate rental income.
Cons Of Buying A Home
With these advantages, buying a home also brings a few disadvantages.
Homeownership via buying a home limits your opportunities to move to a new place or explore a new neighborhood.
It Is Expensive
It might seem obvious but buying a home requires a lot more saving compared to renting a space. Even if you plan to mortgage, you still need to have a certain percentage of the entire cost as a down payment.
You Have To Pay For Repair And Maintenance
Owning a home brings several responsibilities which you don’t have to bear when renting a home. Some of these responsibilities include paying for repair and maintenance for all issues that may come up.
Rent Or Buy A Home – Which Is Right For You?
There are pros and cons of both renting and buying a home, but your current financial situation is a key determinant of the choice you make. Hence, you need to evaluate your current financial position and your budget before you make the call.