Hello World! Welcome Friends! There’s a big debate between financial experts about whether buying or renting a home is the best option.
But, the truth is the decision depends on your circumstances and personal preference. So the answer of whether it’s a bad or excellent idea to buy or rent is up to you.
Here are a few points and questions to consider to help you figure out the answer to this question.
Cost of Buying or Renting a Home
The cost of buying and running a home varies by location. Buying and renting a house in New York City will be very expensive. Whereas finding a home in other states, like Texas and Missouri, is much cheaper, and you’ll get more house for your money.
But, keep in mind, the cost of wages within an area often meets the rate of living. So while housing in New York is more expensive, the city usually has jobs with salaries to match.
So if you’re planning on moving to a more expensive or cheaper state in the U.S., Check first whether they offer jobs with good enough salaries to secure a decent living.
You can use sites like Rightmove to weigh up the costs of renting and buying. In some areas, it’s cheaper long-term to save a downpayment to buy a home and pay the mortgage than to rent.
Plus, some government help and schemes are available in certain areas in the U.S. to help first-time buyers purchase homes.
One example being, some areas qualify for a USDA loan. USDA financial help is for first-time buyers who want to live in specific rural settings. You can check rural development map to see if your address qualifies to avail of the loan program.
Often buyers won’t need to put down a downpayment. And the interest rates for the mortgage are lower to help aspiring homeowners on the property ladder.
The main question you need to answer in this section is whether owning or renting a home is comfortably affordable for you.
In consideration of that question, think about including the following in your mock-up budgets to help you reach a conclusion;
Initial costs;
- Down payment
- Moving Fees
- Insurance
- Application processing fees
- Legal fees
And the monthly fees;
- Utility bills
- Maintenance Costs
- Insurance
Estimate the costs of renting and buying based on homes in the area you want to buy or rent. If you’re eligible for a USDA loan, use the usda mortgage calculator to work out how much your monthly mortgage payment will cost.
Some number crunching is essential to figure out what you can easily afford. It’s a step that can’t be missed and will let you know which option, whether buying or renting, is feasible for you.
Home Maintenance
Another thing to consider when buying or renting a home is how much it will cost to maintain your home.
Landlords are obligated to take care of repairs and maintenance in rented properties. Should the boiler break or the roof begin to leak, it’s the landlord’s responsibility to get those jobs fixed and paid for.
When you own a home, however, that obligation falls to you. However, you can buy insurance to cover costly repairs like the boiler breaking, which is wise if you don’t have the savings to pay for big repairs outright.
Other than the cost of maintaining a property. You may want to ask yourself whether you like gardening and can see yourself taking care of a front yard. Or whether you enjoy decorating and dream of putting your stamp on your own home.
Leasing a rented property means you’re restricted on what changes you can make to a home.
Usually, if you want to paint the walls a different color or add new fixtures, you must ask the landlord. But, often, landlords like to keep the property neutral in color so that it’s easier to lease to new tenants if you move.
However, when you buy a home, the interior design and the garden is all up to you. You can paint it, knock down walls, install a new kitchen, and landscape the yard however you wish.
To end this section, try and answer this: are you prepared to pay maintenance fees and take care of DIY tasks and decorating in your home? Or would you prefer to leave this up to a landlord?
Current Lifestyle And Future Plans
This step can help you reach a decision much quicker about whether to buy or rent. Let’s walk through a few circumstances and see whether renting or buying works out better.
Scenario One
If you’re young, single, and planning to travel the world in a year, you may prefer to lease a property. And before you leave your home, end your lease.
Alternatively, suppose you’re set on purchasing a property and can afford to cover the mortgage on your travels. In that case, you could consider buying a home and leasing it out to tenants while you’re away.
Scenario Two
If you’re nearing retirement, the kids are going to college in 5 years, and you plan to downsize your home. Buying or renting a new, bigger family home right now isn’t cost-effective.
Instead, it would be better to wait until you’re ready to downsize and then look at whether renting or buying works better.
Scenario Three
On the other hand, a couple with stable jobs who love the area they work in and want to raise a family. Could benefit from investing in a family home to live in long-term.
With stable jobs and a love for the area, they’re unlikely to want to move anytime soon, which will give the house a chance to appreciate in value.
Present circumstances and future plans matter when deciding whether to rent or buy.
Ideally, when you buy a home, you’ll want to stay there for at least five or more years. To ensure that when or if you sell, you’re more likely to build equity in the home, make back the expenses you paid to move house, and hopefully increase the home’s value.
Renting a home is ideal for people who want the freedom to leave in a short amount of time.
Buying a home is a more significant commitment as you could lose money on the property if you sell too soon. Plus, it would take a while to sell the home also. And so buying is better for people who can see themselves staying somewhere for a while.
Personal Preference
There are many pros and cons of buying and renting a home. However, among the reasons above, it’s also down to personal preference.
To recap on some of the above points, here’s why renting or buying may be well-suited to you;
By becoming a homeowner, you can:
- Make any DIY changes you want.
- Pay off your mortgage, and you’ll only need to pay the utility bills.
- Your property could increase in value, enabling you to release equity if you need it.
- Paying off your mortgage could form part of your retirement plan.
- Unlike renting, you won’t have to leave your home at short notice.
- You won’t have to worry about a landlord raising the rent.
- Low-interest rates, coupled with government support and loan schemes, make becoming a homeowner more affordable.
- You can lock in great mortgage rates for two years or more to prevent the mortgage price from changing and to keep the rate at a stable level.
- Rent out your home if you decide to go traveling or want to buy another property elsewhere.
- Equally, you may rent out a room in your home, to help with living costs.
- You can also leave your home to your family in your will as their inheritance.
By renting a property, you may:
- Commit to either a short term or long term lease to work with your plans
- Some leased properties have kitchen appliances and furniture already. Saving you money and time buying these goods.
- You can leave the property by giving your notice to end the lease.
- You won’t need to pay for any repairs on the house.
- Allows you to change location frequently to suit your job or lifestyle choice
- Getting on the rental ladder, in some cases, is cheaper than getting on the property ladder.
- It’s easier to trial living with someone, such as a friend or partner, when renting.
- Providing the rented property is kept in good condition, you’ll get your deposit back when you leave.
Moving into your own home is a big decision to make. With the guide above, you should be able to reason whether renting or applying for a mortgage is the right option for you.
To summarize, the above guide entails getting you to think about the following:
- Whether you can comfortably afford to buy or rent a home of your choice in an area, you want to live in.
- Can you afford the estimated ongoing costs associated with renting or buying a home?
- How long are you hoping or planning on living in a particular area?
- What your present and future plans entail, and how this affects your location.
- Whether you would prefer to design a home to your liking.
- Is there government help or loan programs in your state to help you afford a new property?
Hopefully, you’ve gained a clearer picture of whether your finances, circumstances, and personal preference leans towards buying or renting with the guidance above.
Click the links below for any posts you have missed:
Moving House Checklist and Tips
Building Inspections Melbourne
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Toodles,
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