One of the biggest questions up for debate is what has more benefits – renting or owning? Truthfully, that depends on what you consider to be important. For some, having the stability of paying a set amount every month, not having to make home improvements, and not having the long-term commitment of a mortgage would make renting seem like the more feasible option. When it comes to home ownership, the clear benefits include creating equity by making mortgage payments, not having a landlord and having the opportunity to build wealth all make home ownership seem like the more appealing option.
One of the biggest disadvantages for renting includes not being able to use your monthly rent payments to gain equity. Once you pay your landlord, the money is theirs as opposed to having it go towards your own property. Landlords also have the right to raise the rent or to repurpose the building you live in, leaving you in limbo. If being in complete control of your living situation is important to you, owning your own home may be your best option. By making the commitment to owning your own home, you get the benefit of not having to worry about moving anymore until you’re ready to sell your property for profit or simply because you crave a change of scenery. When renting, you typically have to re-evaluate your living situation after your lease ends annually. For some, this may be looked at as an asset.
One of the benefits of renting property is that if you do experience a change in income, you can either upgrade or downgrade apartments once your lease ends. Unfortunately the same doesn’t remain true for homeowners. If you have a mortgage to pay every month, losing your job or experiencing a steep decline in income could result in losing your home. Unlike with an apartment, not making your payments on time can result in you defaulting on your home loan. With that in mind, unless you have stability financially, renting may be the best option. Though home ownership is a great goal to aim for, you shouldn’t start shopping for a home or mortgage until you’re 100 percent ready. Contrary to popular belief, home ownership has certain drawbacks that can be eliminated by choosing to rent.
Home ownership can mean a new slate of responsibilities that can become costly, quick. One way the costs of home ownership can add up is through property taxes which vary depending on where you live. You’ll have to learn what your community’s property tax rate, and remember your property’s assessment when tax season comes around. Along with new taxes, you’ll also be on the hook for maintenance and repairs. If you notice something around the home isn’t working, you’ll be responsible for finding the materials you’ll need, and getting the job done unless you’d rather hire a handyman to get it fixed for you. Not having to worry about having a flexible budget for the small things that may come up is another benefit to renting property.
Essentially, if you’re wondering which option is best for you take a good hard look at your budget and determine how much room you have to work with should something happen to your form of income. Would you be able to make small fixes to your home and make regular mortgage payments? If not, renting may be a better option for the time being.