Buying a Home vs. Renting: What's Right for You?
Home ownership is considered by many to be part of the so-called “American Dream.” However many Americans still opt to rent.
There are many reasons that renting may seem like a good option for consumers, for flexibility as well as less commitment or even what is perceived as a smaller financial investment.
The reality is that homeownership is still a good option for many. Even if you’d previously thought it wasn’t possible for you. Still on the fence about making the transition from renting to buying? Here are some things to consider.
Equity is one of those buzzwords you may have heard of in conversations about real estate. Basically, equity refers to ownership. It’s defined as the difference between the value of the assets (your home) and the value of the liabilities of something owed (i.e. what you owe toward your mortgage).
But the really good news is that with every mortgage payment you make, your equity increases. Your home will also increase in value over time. Therefore, your home represents a form of savings in your equity. Renters don’t build equity, regardless of how much time they spend in a home.
Fixed Housing Costs-
Prices on everything go up over time. If you have a fixed-rate mortgage, you know your monthly housing costs are not going to change. There are other mortgage options, such as ARM (adjustable rate mortages) but your mortgage pro can help you sort that out and determine the best option for you.
Renters generally face increases in their payment every few years. Landlords can raise the rent with very little notice depending on local laws. If you own your home, you don’t have to worry about that.
Do What You Want With Your Home-
Homeownership also provides you an element of control. When you own a home, you can make nearly any changes you see fit. Change the flooring, paint the walls, put in a pool, it’s your decision. Some neighborhoods or homeowner’s associations do impose certain rules and regulations, but typically these are outlined clearly so you can learn what they are before moving into a neighborhood.
With renting, the landlord ultimately has control over what happens to the property. And if you have an inflexible landlord who doesn’t permit any sort of upgrades or renovations, the only way a renter gets to make changes is to go through the cost and hassle of a move.
As a homeowner, you may find that you’re more likely to become involved with the people in your neighborhood. Putting down roots in a place gives you a certain feeling of community and it also may make you feel more invested.
If you’re renting, you may find it less of a priority as you may decide to move when your lease is up. If you know you’re going to live in a home for five or more years, it’s more likely that you’ll put the effort into getting to know the folks living around you.
Buying A Home Is An Investment-
When your home goes up in value, even by only five percent, that’s a significant return on the investment represented by your down payment. As your home’s value increases, your return only grows.
These are just a few ways owning a home still beats renting. Maybe it’s time for you to look into finding the home that’s right for you.