When you’re ready to live independently, buying vs. renting becomes a significant question.
Which is the better deal and why? The answer depends on your financial circumstances, lifestyle, and preferences.
Consider whether buying is the right choice for you now, and when renting can be an advantage.
Are You Ready to Buy a House?
The pride of homeownership is a compelling desire for most people. However, you need to be ready for this major purchase.
Buyers should be out of debt, have an emergency savings fund, and have the cash to make a 10 – 20 percent down payment. Plus, plan for a house payment to be 25 percent or less than your monthly take-home income.
Finally, consider whether you want to live in the neighborhood for three or more years to give the property time to appreciate. Inquire over at Fellowship Home Loans to learn more about being prepared to buy a home.
6 Benefits of Buying a House
Buying a house is often the largest investment of a lifetime. The benefits of buying a home rather than renting include:
- Paying a mortgage means getting closer to owning the home every month. Paying rent is money spent that never comes back into your pocket.
- Buying a home intelligently means the house will appreciate over time and you can cash-in on the equity. Spending $150,000 on a house five years ago that is now worth $150,000 means you became $50,000 wealthier.
- Homeowners enjoy a tax deduction, which helps them save money.
- Buying gives you the freedom to renovate and decorate your property any way you like best.
- Buying a house gives you peace of mind and privacy unless you decide to have tenants.
- Pride of ownership makes you feel good after a long day at work.
The Cons of Buying a House
Buying a house is exciting, but keep the cons in mind to ensure you are making the right decision.
- Relocating is more challenging when you need to sell a house. Traveling can also be more difficult because you are responsible for the property when you’re gone.
- Maintenance is done by the owner – and that will be you! Calling the landlord to fix a leaky faucet is no longer an option.
- Owning a house means facing a myriad of expenses, from homeowners insurance to fixing broken fixtures.
When Should I Rent?
Renting is a great option for people on a budget, or those with a bad credit score who are looking to improve it with timely payments. Renters can move easily, which is a huge advantage for people starting in careers.
Plus, you don’t pay for maintenance and can call for help if something breaks down in the middle of the night. Cons of renting are rent rates continually increase and the money spent is gone.
There are no tax deductions or incentives for renters. Also, you must ask a landlord for permission to renovate the home or own a pet.
Renting is a smart choice when you want to stick to a budget or relocate for better job opportunities. If you don’t have savings, it helps to have someone to call when things must be fixed.
Owning a home is an investment in your future, but you need to be ready to buy. Work with a professional to examine your credit and determine if now is the right time for you to start enjoying the freedom and pride of homeownership.