There is an ongoing debate many people face when choosing living accommodations: Should they invest in the purchase of their own home or stick with renting? When it comes to buying vs. renting, it is important to consider factors that will not only affect you now, but also in the future.
Benefits of Buying Your Home
1. You will be growing equity.
One of the most important benefits of buying a home is that with each mortgage payment you will be building equity. This equity can give you security in the event of a catastrophic financial issue, such as a major medical problem or change in employment. The best part is that eventually you will own your home.
2. You will have an asset.
When lenders look into your credit history to judge your ability to repay a loan, they look for income, debt, and assets. By owning your home, the equity will be considered an asset and will help you to secure the loan. This can be a great benefit for those who may want to start a business, since start-up loans will often require the borrower to have personal assets.
3. You will get tax deductions.
When you own your home, you will be able to deduct your taxes and interest paid for the year on your tax return. You may qualify for a homeowner’s tax credit as well. If you end up performing any energy efficiency improvements on your home, you will also be able to apply those credits.
4. You will not have a landlord.
While it may not seem like a big deal to have a landlord, it can sometimes turn into a rough situation if there are any disputes. When you buy your home, you are the property owner and will able to make decisions without having to involve a middle man.
5. You can make it your own.
By owning your home, you can turn your living space into whatever you want. When you rent a home, you are usually unable to make even small changes, such as painting or putting holes in the walls for fixtures. When you own your home, you will be able to not only decorate anyway you want, but also to embark on actual remodeling projects.
Benefits of Renting
1. You will not have to worry about maintenance.
When you own your home, you are the one who will be responsible for any repairs and general upkeep. When you rent, either your landlord or a maintenance professional will be responsible for handling any repairs and performing general maintenance on the home.
2. You can move more easily if you don't like the location.
When you rent, typical leases run about six months to a year. Since you do not have much money invested in the property (aside from a deposit), it is simple to move to another location if you find you do not like the accommodations or the area in which you live.
3. You will have fewer expenses.
It will cost significantly less to move into a rental property than it will to buy a home. You will not need to pay any closing costs or a down payment. Additionally, the monthly expenses amount to less than they would if you purchased a home. Renters insurance costs less than homeowners insurance, plus when you own your home you will have to pay for property taxes in an escrow account with your mortgage payment.
4. You won't have to carry a long-term mortgage.
One of the benefits of renting is that you are not committing yourself to a long-term loan. If you were to lose your job or your financial situation was to change, you would not have to worry about a foreclosure.
5. The credit requirements are not as strict.
While lease agreements do require some rental history and a decent credit score, the requirements are not nearly as stringent as a when you're applying for a home loan. Additionally, your payment will be the same no matter what your credit score is once your rental application has been approved.
When it comes to buying versus renting, there are many factors to consider. Whether you choose to buy or rent, the first step to securing your new home is getting your finances in order. Determining what you can pay and what you want your home to do for you will play key factors in your ultimate decision.<<< Return To Blog