Owning a home is one of the most expensive purchases most of us will ever make during our lifetime. Whether you decide to rent or buy, exploring the rewards and risks of both options to arrive at a conclusion is key to understanding what’s most worthwhile in your situation. The goal is to bring to light what’s best for you and where you want to invest your money. Consider the following analysis of both options.
Advantages of Home Ownership versus Renting
Owning Builds Equity: As time passes real estate values rise and as you pay down your mortgage, owning is a great way to build your own equity. When you rent, you’re likely paying off your landlord’s mortgage and investing into their equity.
Pride Of Ownership: Buying a home in a community you love can provide a sense of stability and pride that you may not find when renting.The investment of your time and commitment to neighbors and community provides a benefit to both your family and the people around you. This is an important aspect to consider when making the decision whether buying or renting is right for you.
Tax Benefits: Tax advantages offer a great reason why Owning is a great choice. Owning your own home allows you to make upgrade and property tax deductions, in addition to some mortgage expenses.
Freedom to Make Changes: When you own your own home, you are free to decorate or upgrade things as you please with no need to get permission to paint walls or dig a garden in the backyard. You can express your own personality and tastes, which can add to the quality of your life. When you rent, you’re limited to what the landlord allows you to do.
Disadvantages of Home Ownership versus Renting
Full Responsibility with Maintenance. Owning your own home means you’re entirely responsible for your homes upkeep. If the furnace breaks down, that’s on you to get it fixed. Not the case when you rent, with any maintenance issues being covered by the Landlord.
Lack of Moving Flexibility. Renting offers much more flexibility when you want to move, especially for those that don’t stay in one spot for too long. When you own your own home, relocation is only possible when you sell or rent your property, which can become timely in bad market conditions.
Higher Costs. Home Ownership can become quite costly to attain and hold, with selling and closing costs, down payments, property taxes insurance, and condo fees (if you own a condo) none of which a tenant has to worry about.
So What’s the Better Option?
Studies indicate that it becomes cheaper to own a home rather than rent one after 5 years time. Given this long term benefit, in addition to the short terms benefits as outlined above, overall homeownership is by far the better option and one of the best single investments you can make.