Are you a long-time renter who is considering buying a home? Perhaps you’re in a transitional phase of life and, after owning, you’re looking at renting your next home. No matter your reasons for renting or buying, both options have their merits, advantages, and drawbacks. Below, we’ll cover a few of those pros and cons.
Pros of renting:
1. Some costly repairs are covered by the monthly rent at no additional cost to you.
When you own a home, you are responsible for organizing and paying for the repairs to the property. When you rent, landlords take repairs into consideration when calculating the rental amount for their properties. While you will most likely be responsible for cosmetic repairs, the landlord is usually responsible for the heating, plumbing, water, and other repairs that are necessary to make a dwelling livable. To be certain of which repairs your landlord or property management will cover, check your rental agreement.
2. More flexibility if you need to move.
A rental agreement is a binding contract; however, most rental agreements are only good for a certain length of time (usually one year). If at the end of your rental term you decide you want to move, you simply notify your landlord. He or she will do a final walkthrough of the property on the day you move out, with any necessary repairs being deducted from your security deposit. Provided the property is still in good condition, moving out is fairly simple.
Cons of renting:
1. Landlord restrictions on what you can do to the home.
Restrictions on how you can decorate a rental home vary from property to property. Most landlords stipulate that any cosmetic changes made to a property, like painting or inserting nails into walls, need to be reverted or repaired prior to moving out. If the landlord does not feel the property has been returned to its original pre-rental state, he or she may hold back a portion or all of your security deposit to make the necessary repairs.
2. You spend as much as a mortgage payment, yet you earn no equity.
Some loan and credit professionals claim that paying rent is equivalent to throwing money into a hole. This visual is a bit extreme and not quite fair, since you are getting the benefit of a home while you pay rent (hardly a waste of money!), but it is true that you do not get the perks of homeownership, such as earning equity or the tax benefits that come with owning your home.
Pros of buying:
1. Owning a home is a reliable long-term investment that can earn you money.
When you buy a home, your monthly mortgage payment goes towards paying off your loan. The amount you payoff is called equity, and options are available to you to use the equity for your own financial benefit. If you sell a home you owned for more than you paid for it, you may walk away from the sale with money in your pocket. You can also keep a home you no longer live in and convert it into a rental property, allowing you to collect additional income from it.
2. It’s a (more) permanent place to call your own.
Even if you are only there for a few years, buying a home allows you to put down roots more permanently than a rental property. Not only are there social benefits to living in a community for a longer stretch of time, but purchasing a home allows you freedoms that you don’t get with renting, such as making changes to the property. Making changes to the home or property may even increase the value, such as adding a sunroom or patio.
Cons of buying:
1. Offloading the home can be tricky if you need to move.
If you decide to move, you will need to either sell your home or convert it to a rental property. It may take time to sell your home or find a renter, which would mean paying for two homes simultaneously during that transition period.
2. Home availability varies when you decide to buy.
Depending on your location, the time of year, and current interest rates, the quality and quantity of homes available can vary greatly. Consequently, you may encounter difficulty finding a home that fits every single one of your needs.
There are many more factors to consider when deciding whether to rent or buy, and every situation is unique. Luckily, at Southern Trust Mortgage, we have experts on hand to help you decide whether homeownership is the right choice for your family. Contact us today and let us help make home happen for you.