If you’re toying with the idea of buying or renting a home, then you’re about to make one of the biggest decisions in your life. Some people may wonder if the decision to buy or rent is the right one since the average person changes their mind regarding this decision every five years or so.
If you’re on a salary bracket, then you may need to spread your finances to the limit as you take this information into consideration, as there are advantages and disadvantages in both options. Either way, the best way to know whether renting or buying is the better option, there are several things to consider.
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Things to know before renting
Before choosing to rent, here is what you need to know:
- You need to know what the lease can do and cannot do before signing it. Many times the law avoids covering the conditions covered in the lease agreement. When it comes to living arrangements, the lease is legally binding.
- You need to know how to protect your security deposit. Walk through the house and assess the room conditions including bedrooms, kitchens, bathrooms and the exterior before signing the lease. Note any damages and mention them to the landlord before signing the lease. Make sure the damages are documented.
- Ask about the landlord insurance policy. This will protect you against damages caused by floods, fire or burglary.
Beauty of renting
One of the beauties of renting is that you’ll have no maintenance or repair bills to worry about. When you rent a home, the landlord is responsible for all repairs and maintenance and these can be costly. For instance, if your roof starts to leak or the boiler malfunctions, you don’t have any financial responsibilities to have them fixed.
While renting, you get access to amenities that would otherwise be costly. Luxuries like a fitness center or a communal pool come standard with no additional charge to tenants. On the other hand, if homeowners wish to have these installed, they’d have to part with thousands of dollars.
Another plus is that a renter need not pay real estate taxes or land rates.
However, to many people, owning a home of their own makes more financial sense than renting one. Here are some of the reasons owning a home is better than renting one:
1. You own the property so you can do whatever you want
Owning your own home means you can make adjustments at will. You can paint the rooms any color you want, change floor carpets to wood or put new furnishings without having to ask any landlord for permission.
2. Appreciate benefits
Owning a home gives you better satisfaction than owning a car or stocks. You derive the daily lifestyle benefit of living in the home. As the home appreciates in value the benefits accrue faster as opposed to stocks or another asset because you derive the appreciation of the entire home’s value.
3. Tax benefits
The law allows homeowners to deduct mortgage interest and other taxes (eg. Property tax) when filing tax returns every year.
4. As rent goes up, mortgage costs remain the same for homeowners
If you pay a fixed-rate mortgage on the purchase of your home, it rarely changes But a rented property hikes rents sometimes without notice.
As noted above, it is better to own a home than rent one. Multiple evidences shows that the returns on owning a home are not just financial, but it provides a stable place to live since mortgage rates are fixed while rents fluctuate all the time due to inflation.