The Benefits of Renting
Less Maintenance Responsibility: The cost of property maintenance is factored into your monthly rent payment. Your landlord is typically responsible for major repairs to keep the property livable, such as issues with heating, plumbing, and water. Always check your rental agreement to confirm what repairs your landlord is responsible for.
Access to Amenities: Many rental properties include amenities such as swimming pools, gyms, and community areas. The cost of maintaining these areas is typically included in your rent payment.
Greater Flexibility to Move: While your rental agreement is a binding contract, leases are usually only valid for a certain length of time (typically one year). At the end of your lease, you can decide if you want to move or stay. Should you need to move sooner than expected, breaking your lease or subletting is typically less expensive than selling a home.
The Cons of Renting:
Limited Personalization: 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 your landlord determines the property has not been returned to its original state, they may hold back a portion or all your security deposit to make the necessary repairs.
Unstable Costs: Your rent can increase significantly at the end of your lease. This means a once affordable apartment may no longer be budget-friendly, potentially forcing you to move more often than you anticipated.
Lack of Financial Benefit: While your monthly payment is comparable to a mortgage, you miss out on some of the most valuable benefits of owning a home, such as building equity and accessing potential tax benefits.
The Benefits of Homeownership:
A Long-Term Investment: Your monthly mortgage payment goes towards paying off your loan. The amount you pay off is called equity, and options are available to you to use equity for your own financial benefit. If you sell your home for more than you paid for it, you may walk away with a profit. Alternatively, you can convert your home into a rental property, allowing you to collect monthly income.
Financial Stability: Unlike rent, if you have fixed-rate mortgage, your principal and interest payment doesn’t change from year to year. However, property taxes and homeowner’s insurance can change, which may cause small fluctuations in your total monthly payment.
Freedom to Personalize: When you own your home, you can paint, remodel, and decorate without having to worry about restoring things when you move out. Keep in mind you will need to follow local building codes and obtain any necessary permits before starting any major project.
Some neighborhoods are governed by a Homeowners Association (HOA), which do have rules or guidelines for residents to follow. Before buying a home in an HOA, read the rules and determine if they are something you are willing to comply with.
The Cons of Owning a Home:
High Upfront Costs: One of the biggest reasons people choose to rent over buying is the high upfront cost. While the initial fees are significant, there are loan options starting with as little as 3.5% down with an FHA Loan and plenty of down payment and closing cost assistance programs available when buying a home. Connect with a Southern Trust Mortgage Loan Officer to see what you may qualify for.
Additional upfront costs include:
- Property taxes
- Mortgage Insurance
- Home Inspection Costs
- First-Year Homeowner’s Insurance Premium
- Title Search
- Title Insurance
- Points (optional prepaid interest on the mortgage)
Full Responsibility for Maintenance and Repairs: If your air conditioner breaks or the basement floods, the responsibility of fixing and paying for the repair falls entirely on the homeowner. Unlike renting, there is no landlord to call. You must be prepared to handle both routine upkeep and emergency costs.
When buying a home, you have the option to purchase a home warranty. This warranty can help cover the repair and replacement costs for major appliances and home systems like plumbing and electrical.
Important Note: Be sure to read your home warranty contract carefully to understand your coverage, deductibles, and limits, as warranties do not cover all issues.
There are many other factors to consider when deciding whether to rent or buy, and every buyer’s situation is unique. At Southern Trust Mortgage, we have a team of specialists and experts available to help you decide whether homeownership is the right choice for you and your family or what steps you would need to take to make it possible. Contact us to be matched with a local lender to help make home happen for you!
