By Bryn Huntpalmer
Navigating the housing market and rental landscape can be an overwhelming and tricky task. There are so many factors to consider that when you are ready to finally take the plunge and decide, rent or buy, you might not even know where to begin!
I can certainly understand your struggle, so in an effort to help you make the best decision possible I broke down the process into an easy-to-read list of pros and cons for both. Just make sure to invite me to the housewarming party, OK?
If you’re on a lease agreement, you can usually avoid short-term rental fluctuations of the housing market and pay a fixed amount each month for the term of the lease.
When your oven suddenly stops working or there’s an issue with the plumbing, it is pretty nice to be able to call your landlord for repairs. Of course, make sure your lease agreement includes clear verbiage on who fixes appliances that stop working.
- Renting costs can certainly change based on the value of the area. Unfortunately, many renters (especially those paying month-to-month) experience a rise in their rental payments due to a newly thriving neighborhood or bustling downtown that draws in more renters (and buyers, too), and makes for more competition.
- There isn’t much flexibility available to renters who love to remodel. You’ll either have to consult with your landlord on changing the paint color in your kitchen, or forgo the project all together. Also, you’ll need to make sure any damage you cause is fixed and/or paid for when you move out.
- Since a rental isn’t your own place, you won’t be able to get any tax breaks or gain equity or assets. While renting a home isn’t considered a financial investment, owning a home is, so if you plan to stay somewhere for a long period of time, it might be in your best interest to consider whether owning a home is a more financially viable option. Or, you can always purchase a home and rent it out yourself! But more on that later.
- Unless you are paying cash, an initial down payment is usually required and there are buyer closing costs associated with any home purchase. However, depending on where you live there are still financing programs available that will cover a majority of these costs.
- Home insurance is a must (think fires, floods, break-ins and other hazards)! This is an absolutely mandatory requirement of any lender if you have a mortgage.
- The value of your home could appreciate over time. In fact, right now, tight inventory in many markets around the country continues to push up the prices of homes nationwide.
- The draw of homeownership is in its stability. Your home is your own and you can do with it what you please! Whether it’s painting the walls your favorite hue, adding on a second floor or building a porch, you don’t have a landlord to consult first.
- Overtime, as you pay down your mortgage, you build equity along with market value of your property and that is definitely a good thing!
- Unlike the transience of living in an apartment, owning a home means that you can also rent it out if you would like to spend time somewhere else. Using houses as rental property is not uncommon and even beneficial in helping you pay off your mortgage.
- As a homeowner, you have the current ability to take advantage of tax breaks. You can deduct your mortgage interest and property taxes when it comes time to itemize your deductions, resulting in a lower taxable income. See your tax advisor for details.
BRYN HUNTPALMER is a mother of two young children living in Austin, Texas where she currently works as an editor for Modernize. In addition to regularly contributing to home remodeling and design websites around the web, her writing can be found on Lifehacker and About.com.