There are many factors to consider when deciding between buying and renting a house, but in this article, let’s focus on your financial situation and preferred lifestyle. Both options have pros and cons.

Buying a Home

Home purchasing is widely regarded as a wise financial investment. In addition to other benefits, homeowners can make their money work for them, as paying off mortgage loans increases home equity, turning a home into a potentially lucrative investment over an extended period of time. The possibility of tax benefits also creates a significant upside to homeownership because mortgage interests and property tax payments are tax-deductible.

Conversely, a home is expensive to buy. You will have to make a down payment, which can be up to as much as 3 to 20% of the price of the home that you are buying. On top of that, closing costs, property taxes, home insurance, and maintenance fees can mount up very quickly. Hence, a steady income and good credit are required to secure the best possible mortgage terms.

Home Rental

Renting is flexible and requires a lower investment. You typically pay one month’s rent plus a security deposit. Renting may seem appealing if you are likely to move relatively soon or when financial uncertainty arises.

The cons of this idea are that you cannot build up equity (i.e., your money is not working for you), and a landlord may increase the rent over time. They will enjoy the advantages caused by the appreciation in property prices or tax advantages related to owning a home instead of you.

Life Style Inclinations

Stability vs. Flexibility

Homeownership is stable, and such an investment provides a sense of security for many people. One can modify the structure of their house as per their preference without going back to the landlord for adjustments. But it also can turn your home into the proverbial ball and chain, as moving for jobs or personal reasons is inconvenient if you sell your home before leaving.

Renting is the best option when flexibility is valued, such as changing residences often or not wanting to engage in home maintenance responsibilities. This is particularly attractive for the young or those unsure of their long-term plans.

Maintenance and Responsibilities

Owning a house can be very challenging in terms of maintenance and repair. While some appreciate the opportunity that comes with undertaking the initiative of making improvements and customizing property, others would consider these responsibilities and duties burdensome and very time-consuming.

Usually, renters can bear fewer maintenance duties since the landlord typically does extensive repairs and maintenance. This should mean less stress and less time is taken, freeing up time to make renting more appealing to people with fast-paced lives or few handyperson skills.

Long-range Goals

Property remains an excellent long-term investment. Over some period, the property’s value appreciates, giving the owner some wealth. It also gives one a wonderful financial position after retirement and the completion of mortgage repayments.

Real estate markets can be pretty fickle, and a steady increase in property values is not guaranteed. Before purchasing a home, you must consider market conditions and whether you have adequate staying power to withstand downward cycles in the housing market.

If you feel that you will shift from one place to another soon due to better job opportunities or any other reason, renting opens a vast window of opportunity for relocation. Homeownership may bind you to a location, limiting job opportunities and making shifting from there complicated and costly.

Conclusion

Whether renting or buying a house is right for you will depend on your career plans, financial health, and personal plans for the future. Both choices have positives and negatives, and they are generally inverses of each other. What works for one person will not be the same as what will be done for another. Consider the long-term implications, and use a financial advisor if necessary. Learn more at Northwest Realty Group. We pride ourselves on customer service and an exceptional real estate experience.