At times, it could make a financial sense to buy a house instead of renting. Considering the affordability factor in finding the perfect housing, should young adults tie themselves down with a property? Whether to rent or to buy a house, it is a major decision that affects not only your financial state, but also your lifestyle. The two options both have their advantages and disadvantages depending on your situation
While your own financial capability can be the biggest factor of all when choosing whether to rent or buy a house, there are also a number of things that you have to consider in finding a home as follows.
Advantages of Renting
One of the main advantages with renting is that no maintenance is required. For example, if you need a plumber, you can easily call the landlord to arrange the repair for you. It is also easier to move. This means that you can switch to another house anytime, especially if you have an opportunity to relocate in the near future. There is also no guarantee that your home will increase in value over time. If you are renting, you can avoid owning a depreciating asset.
Disadvantages of Renting
Meanwhile, rent is rising in several cities. So, you may be facing an increasing rental fee in your monthly housing payment. With renting, you are not building equity or an asset that you can sell when you are ready to move. Another disadvantage is that you don’t receive tax benefits, in contrast to homeowners who can deduct their mortgage interest payments and their property taxes from their federal income tax. You also can’t paint or remodel the place that you are renting without the owner’s approval.
Advantages of Buying
While not everyone can or wants to be a homeowner, there are some financial advantages that can make becoming one enticing. Owning a house lets you build equity as homes historically increase in value. Even if your home doesn’t increase in value, you’re still building equity as you pay down your mortgage for as long as your home maintains its value.
You can also use your home as an investment, such as renting it out and generating income from it. And of course, you have the freedom to decorate your house anytime. This is one of the joys of being a homeowner.
Disadvantages of Buying
On the other hand, owning a house also has its share of disadvantages. First, you have to pay for your own maintenance fees to keep your home in good condition. Also, take note that your home is not a liquid asset. Meaning, you will not be able to sell it as quickly as possible for as much money as you want in case you decided to do so. Another thing to consider is the property tax which tends to go up, making your house less affordable. You might also use up your savings for a down payment, closing costs, and for other expenses as a homeowner.