More and more people are looking to become homeowners nowadays. This does not mean that it is better to buy a house than to rent. The choice between buying and renting is yours and depends on your personal situation. Here is a list of the advantages and disadvantages of both options. However, there is a question you need to answer before you can make that choice:
What is your budget?
What is your professional and financial future looking like? What sort of interest rates would you be looking at should you choose to apply for a loan, and what is the situation in the real estate market? These are all factors that determine the choice between buying and renting. To help you decide, we’ve listed some objective advantages and disadvantages.
Renting a home
You keep your freedom.
When you rent, you have more freedom than when you buy. You can quickly explore new horizons, especially when you sign a short-term lease. You don’t have a mortgage to pay, so you also have more financial freedom.
Renting is faster than buying.
Do you want to change your address quickly? Renting is the best option. The formalities involved in renting a home are much less time-consuming than when you buy.
Your money goes up in smoke.
As a homeowner, you pay off your own home every month, and the value of this amount remains in your possession. This is not the case when you rent.
You remain dependent on the landlord.
Even if you have lived in a rental property for a long time, the landlord controls all decisions. For example, the landlord may choose not to extend your lease and force you to move out.
Buying a home
You own your own home.
Buying a house or an apartment allows you to make all the decisions yourself. You decide how you renovate your home and what materials you use.
It’s better to pay back a loan than to pay rent.
Paying back a loan is often more expensive than paying monthly rent. However, it is still more attractive because you are paying off your own home, and you will eventually finish making payments…
Your money is “locked in.”
Buying a home is a long-term financial commitment, and the money you invest in real estate is difficult to get back quickly.
Can you afford to buy it?
Once you’ve decided you want to buy, you need to determine if you can afford it. Are your finances stable enough to make a mortgage payment each month, in addition to paying for property taxes and the inevitable repair and maintenance costs? To determine the maximum purchase price, it is recommended that you multiply your annual household income by 3. In a booming market, this amount may not be enough.
Buying: is it a good investment?
Despite the speculation that accompanies a booming market, it’s best not to think of buying a property as an investment. The cost of repairs and property taxes, for example, mean that other types of investments may be more profitable than real estate. Renting out your home may provide you with cash to invest in less volatile areas than the real estate market.
Renting is not always the most economical option.
Of course, in harder-to-reach markets, renting in an upscale neighborhood can cost you more than a mortgage payment. For example, if housing represents 30% of your gross income, you need to earn $80,000 a year to afford a $2,000-a-month apartment.
A place to live, first and foremost.
Both, buying and renting have their advantages and disadvantages. Your choice depends on your situation. At the end of the day, whether you decide to rent or buy, remember the most important thing: you need to feel good about it because it’s where you’ll be living. Let us know in the comments what you think is better…