If you are currently renting but are thinking of buying a home there are some things you need to know before starting. While there are definitely many advantages of homeownership it may not be the best move for you right now. We’ve broken down the various pros and cons of owning a home versus renting in order to help you make a better and more informed decision.
The largest advantage to renting a home is that the landlord is responsible for any major (and some minor) maintenance issues that happen within the property. When the furnace breaks at 3am all you need to do is call the landlord or property manager and they’ll incur the huge cost to replace it. If a pipe bursts and floods part of the home then the landlord will pay for any repairs and replacements. The tenant, in most cases, is just responsible for a minimum repair deductible or minor issues and maintenance that may come up. The landlord is also responsible for any taxes, insurance and HOA or condo fees associated with the property.
If you may move in the next year, now might not be the best time to purchase. Although the home will go up in value in the long term, there are no guarantees when it will happen, and there are costs associated with selling. So, if you're expecting that transfer, waiting to buy may be smarter.
If you're renting and not sure if the area is for you, wait until you're sure. Now, you can move with the breeze, subject only to your lease. If you own a home, it ties you a little more to an area. Of course you can rent the property out, but that has to be something you're comfortable with too.
Finally, there may be credit issues that you may or may not know about that you may need to get resolved before you are ready to secure a mortgage and buy a home.
The dream of homeownership is a principle this country was founded upon. Owning a piece of property not only gives a sense of pride but is also one of the wisest investments you can make for yourself and your future. While renting may still be a better option for some, homeownership means you don’t need to answer to a landlord and can start investing in your future instead of theirs.
Owning a home allows the freedom to decorate, design and maintain your home as you see fit. You finally have the freedom to paint the walls, replace the cabinets, landscape the yard or do any number of things that you couldn’t do while renting. Your home is now something you can take pride in and make it a true reflection of who you are. This feeling is many times what excites first-time homebuyers the most!
On top of the personal gratification, owning a home also has many financial advantages. Every month you pay rent you are basically paying your landlords mortgage and making him/her wealthier. Paying a mortgage instead of rent provides many benefits including equity build-up as you pay down the debt and the interest is tax deductible. Add to this the fact that with a fixed rate mortgage your payment will never increase as they do in rentals (although your taxes may).
Appreciation is another tremendous benefit of homeownership. Over the past 50 years, the average annual appreciation of real estate has been around 5% per year. Of course, this varies from year to year but over time the value of your home will increase above what you paid it.
When it comes time to buy a new home, Uncle Sam has put many other benefits in place to encourage homeownership. Government backed loans are available to first-time homebuyers and military personnel that require little to no money down. Also, when it comes time to sell your home the proceeds of the sale of a primary residence are tax-free up to $250,000 for singles and $500,000 for married couples. Couple this with the leverage one can use when buying a home and it becomes clear why real estate can be the best investment you ever make.
So those are the main facts to consider when deciding if it is a good idea to purchase a home instead of renting. While it isn’t necessarily the right choice for everyone, we hope we’ve made it clear the tremendous benefits that homeowners receive. If you feel that buying a home is the right decision for you then move on to the next section: Why Buy Now?