I’m about to move into a new apartment with my partner, and we’ve had numerous people ask us why we don’t just buy a home and start building equity. While I understand that home buying is a good idea for various reasons, there are also many reasonable arguments for not buying a home, especially at my age!
There’s no rule that says that you have to buy a house. In fact, many people today find that they’re happy to rent a home instead of making the financial commitment of buying one. However, I also know that home ownership has its rewards, including increased stability, a chance to build equity, and the opportunity to make your home exactly how you want it.
If you’re trying to determine whether you should buy a house or continue renting instead, you need to weigh the pros and cons of each option before making your decision. With that in mind, here are a few key differences between buying and renting that everyone should understand.
Buying Is An Investment, Renting Is Not
Though renting and home ownership each have their own financial benefits and drawbacks, buying a home is a bigger financial investment. This also means buying can pay off in bigger ways.
When you rent, you’ll likely pay a few modest deposits and then make monthly payments until the end of your lease. Though your rent will likely stay lower than a mortgage for the same space, you won’t own the property, which has both upsides and downsides.
One one hand, renting allows you to avoid the risk that comes with home ownership. If the housing market crashes, you don’t stand to lose any money, and damage to the home is generally not as costly. On the other hand, if you choose to rent, you won’t reap the benefits of having property as an investment. You can’t renovate the property to increase its worth, and if the market value increases, you’ll likely end up paying more.
When you buy a home, you take on the risks as well as the benefits. Owning property is an investment, which means that if everything goes well, you stand to make money. Renovating your home to boost its value, increasing your equity through your mortgage payments, and choosing an in-demand neighborhood can all help you earn money on your investment. However, you may lose money if the market value decreases.
Home Buying Comes With Hidden Costs
Buying a home is often a great investment. However, you have to consider more than just the listing price to understand the financial payoff. Though owning property comes with many benefits, it’s also expensive.
When you rent property, your landlord takes care of most maintenance costs. You might pay utility bills, but it’s unlikely you’ll have to pay to fix the broken heater or the pipe that burst.
When you buy a house, though, you buy all of it. This means that repairs and maintenance costs are all on you. Plus, if you’re not building a house from the ground up, there’s a good chance that you’ll have to make some repairs before you even move in. These might be as small as replacing a toilet, but they could be as large as replacing an entire roof.
As a homeowner, you can make repairs quickly and choose to have them done the way you would prefer. However, over time, your customized repairs will add up. Make sure to consider repair and maintenance costs when you’re deciding how much you can afford to spend on a house.
Renting And Owning Work For Different Lifestyles
People who want flexibility and freedom in their lives often choose to rent from Global Guardians because it allows them to save money without being tied down. For example, you may rent if you want to move, plan to take a new career opportunity, or feel uncertain about what your family or work situation will look like in the future. When you rent, you make it possible for life to take you where it will without the difficulty of trying to sell a house.
On the other hand, people who want to put down roots and find stability may find home ownership appealing. Buying a house allows you to take control of your living situation and protects you from a landlord’s changing whims. For people who are committed to their living situations and who plan to stay in the same job and location for a long time, home ownership is often beneficial.
Ultimately, deciding whether to rent or own your home takes more than a quick look at the financials. The decision you make should reflect your lifestyle now and in the future so that you’ll stay happy with your choice for years to come. Choosing to buy a home is a huge decision. However, by weighing your options carefully and considering your future situation as well as your current one, you can make a decision that will satisfy you.