Rent vs. Buy
Deciding whether to rent or buy a home is a difficult decision, but it’s one that must be made by most of us at some point during our lives. Each option has its own merits and drawbacks, yet there is usually a choice that is more advantageous than the other is. However, determining which is best depends on several factors, including housing trends in your local market.
Advantages of Renting
Renting a home has several benefits, but they do not apply to everyone. Choosing to rent or buy a home is a highly individualized choice. Following are some of the top reasons to rent:
- Flexible living – Renting allows you to move with as little as a 30-day notice, and there is almost no red tape in the process.
- No commitment – Renting allows you to test a neighborhood for compatibility before making a long-term commitment.
- Fewer responsibilities – When you rent, you are not responsible for maintenance.
Advantages of Buying
Buying a home is often considered more advantageous than renting is, but again, this depends on each person’s individual situation. Everyone buying a new home will experience the following benefits, but the real question is whether they outweigh those of renting.
- Build equity – When buying a home, your money doesn’t simply disappear. The payments on your principal become equity, which is a degree of ownership in your home that can be used as collateral for other loans.
- Tax deductions – Although you will be responsible for property taxes when you buy a home, you will be eligible for several income tax deductions that are not available to renters.
- Complete control – As a home owner, you have complete control over your property. You can decorate your home or remodel it as you see fit.
The Financial Angle
The decision to rent or buy may also be purely based on financial implications, and several factors go into making such as choice. Two of the greatest influences are the local market and the interest rate. Because the calculations are so complex, online calculators have been developed to help in the process. The most important factors to take into consideration are the following:
- Buying price – The price of the home is often considered the most important factor.
- Length of stay – Buying becomes more favorable the longer you plan to live in the home.
- Mortgage – When calculating financial impact, you must factor in the interest rate, down payment and terms of the mortgage.
- Market trends – It is essential to compare home-price growth with rent-rate growth.
Whether you ultimately decide to rent or buy a home, you should always ensure your decision is based on facts and logical considerations. Don’t let your desires get in the way of responsibility and financial sense.