We’ve all traversed down this road and arrived at this perplexing fork at least once in our lifetime. As the present generation has the capability of doing either, we now find ourselves coming face to face with this very question more and more frequently: Should I buy or rent a house? In order to arrive at the answer, we need to ask ourselves another question. For a short answer: Why not buy? For a long answer: How does it factor into our future?
Buying a house is part of the American dream. Everyone dreams of owning that perfect house with the white picket fence. Coming back to reality, does anyone feel the “American dream” is getting tougher and tougher to achieve? If so, don’t feel like you’re alone in this – because…you’re not. These days, an increasing number of people are faced with the confusing choice of whether to buy or rent a home. Here are some facts, laid out bare on the table, regarding these complex options:
Reasons to rent
Flexibility – If you’re new to the area or are still undecided on what you want in a home – and need something quick – renting may be your best bet. With renting, there’s no big, long-term commitment involved. Most renting opportunities stipulate only 6 months to 1 year as the commitment timeframe.
Career transitions – If you’re in the process of embarking on a new career or moving out of state in the near future, renting may be the way to go. Buying a house may make it a tougher transition.
Bad credit – If you’ve been hit by the 2008 credit crisis like most of us have, you may have experienced a foreclosure or increased debt. Renting may be just what you need to get your credit in line and your debt paid down.
No maintenance hassles – If you’re not a “handy man or woman”, repairs to a house may cost a lot more than you expect. Maintenance is a big headache you can avoid if you are renting.
Downsides to renting
Though renting has its upsides, it has its downsides as well. The most common is the issue of rent increase. When your contract comes up for renewal, the rent may go up depending on the market situation at the time. Also, if your landlord decides to sell the house you have been renting for as long as you can remember, you may have no say in it at all and, thus, be forced to scout for a different home.
Reasons to buy
Equity – Every time you pay your mortgage, there’s the upside of gaining equity. Equity is when your house is worth more than you owe. For those with years of paying mortgage under their belt, if the value of their home exceeds 20% of the amount they owe, the ability to borrow against that equity exists. Beware, though, that this will increase your mortgage, and you may not exceed 80% of your home’s value after taking out the equity.
Tax deductions – You may also have a few tax deductions to take advantage of when owning a home. The taxes you pay, as well as the interest paid on your mortgage, are both deductions you can avail of. Also, if you have a home office, there are additional tax benefits for you as well.
Option to renovate – Let’s face it: everyone has their own unique style and way of living. With renting, you may not have the ability to change those outdated appliances or flooring. With owning a home, however, you can modify your house to suit your individual tastes and preferences. You can rip out those cabinets and flooring whenever you want and replace them with whatever you want.
Downsides of owning a home
Although owning a home may fulfill that “American dream” everyone is aiming to achieve, it still does not come without its drawbacks. For example, you constantly have to maintain your home and pay the bills. For example, if the heater breaks, the bill for it comes knocking at your door. In a way, owning a home ties you down and makes it harder to move when you need to.
However, though there are certain drawbacks to owning a home, there are also a plethora of reasons to pursue it. For example, the immense pride of owning your own place is like no other. The security of not having to deal with a landlord that isn’t helpful – or is just in it for the money – is undoubtedly worth the extra effort it takes to own a home. Finally, various tax benefits and the possibility of profit from equity gains exist. The amalgamation of all these factors should tilt the scales in favor of buying a home once you’re in a position to finally take that big leap in your life.