Everyday people buy a home as their great big investment. It is an investment for sure. But, each month you pay the lender for that investment. If you rent, you are paying your landlord each month, but you are paying for his investment. Which of these is better for you and your wallet?
To Rent or Not!
In the past, home ownership was the sign that an adult had “made it”. But many young people have decided it is better to rent than to buy. This used to be considered “The American Dream”. Home ownership rates fell this year to a 48 year low. The rate of ownership at the age of 35 is just 34.1%. Clearly some young people don’t understand about renting being a throwaway financial adventure. The choice between buying a home and renting one is among the biggest financial decisions that many adults make. But the costs of buying are more varied and complicated than for renting, making it hard to tell which is a better deal.
There are a few factors that can impact your reasons for continuing to rent.
- When the buyer is working on your credit.
- If you are relocating in less than two years.
- If saving money for a down payment is necessary.
- You need to maintain flexibility and mobility in your home location.
There are several reasons to purchase a home.
There are instances in which the cost of ownership can be less than renting.
The buyer has control of the property and realizes that the acquisition of the home is an investment.
- The buyer experiences tax advantages. Up to $10,000 in property taxes and interest on up to $750,000 of mortgage debt can be itemized for tax deductions. Interest on second mortgage debt of up to $100,000 is also deductible provided it is obtained to build or substantially improve the homeowner’s dwelling.
- The buyer experiences personal freedom by being able to redecorate, remodel, or make improvements as they see fit.
- The buyer experiences fewer restrictions. There are a fewer number of rules that the home buyer must abide by, which includes restrictions as far as pets, children, and noise goes.
- When mortgage payments are made on time, the homeowner can achieve a better credit rating.
It’s Not Always About Money
Not every decision is made solely based on what makes the best financial sense. Sometimes, there are other factors that need to be addressed first. If we only looked at numbers, people would never have kids because No One ever comes out ahead on that one!
Yet there are disadvantages, which means renting may be the better option for them. The best way to know whether buying or renting is the better situation; the individual must look at their situation in order to make the right decision.
Location and Lifetime
Location and settling down to put down roots and build a network of neighbors. But, there are always location considerations as well. You need to look at school districts and price values in a particular area. If you are looking for strong resale value or to earn a large profit should you need to relocate, you need to pay attention to the location and price to rent ratio.
In the end, it’s your choice which option fits your needs the best. You just have to know what requirements you need and whether renting or buying is best for your budget. Just keep in mind that you can contact for help with either one, renting or buying!