Rent vs. Buying
Rent vs. Buying
Rent vs. Buying has become one of the most important decisions for the modern individual. In the past, it was a no brainer since buying a home was considered the next logical step in growing up and forming a family. In the modern world where mortgages and credit ratings play a large part in any financial decision, the question of whether to rent or buy has become quite vital.
Should I Rent or Buy a Home – The Financial and Personal Perspective
As mentioned above, answering this question requires that you take a long hard look at your finances and your needs together. Both renting and owning a home have their own benefits but these are better understood when you look at them from your unique perspective. Buying a home can have a huge impact on your lifestyle, your monthly expenses and the responsibilities you have to perform every day.
Start by asking yourself questions like:
- Why do I want to buy a house?
- What is my income?
- How much do I spend every month?
- How much mortgage can I afford?
- Am I willing to make changes in my lifestyle by cutting down expenses?
- Is my credit history clean enough for a mortgage?
- Would I still be able to contribute to my other savings (like college fund or retirement plan) after buying a home?
- Do I want to build equity or have more cash in hand now?
- Would I be OK with having to cut down on habits like eating out and frequent entertainment to save money?
Rent vs. Buying a Home – The Pros and Cons
You are making one of the important decisions of your life – one that could impact every aspect of your life for many years to come. Do you know the pros and cons of renting vs. owning a home?
The Pros and Cons of Renting
Renting a home gives you many benefits and some of the most important are:
- You have more cash in hand every month and allows you to manage other savings funds for college or retirement
- You can live your life the way you want to without worrying about paying mortgages
- It is easier to relocate
- If you get tired of the same house, you can lease another one
On the other hand, renting a home also comes with some problems the most important of which is the inability to make any changes to the house you are living in. Another issue is that you have to go through the whole hassle of finding a new place, moving in and settling down every time your lease expires.
The Pros and Cons of Owning
Some of the most important benefits of owning a home are:
- Building equity
- Easiest way to save taxes
- No need to move every year
- Customize and change your residence as many times and in whatever way you like
- If you have to relocate, you always rent out the house and gain more income
The cons of buying your own home include many expenses that you would otherwise not have to pay. For example, repairs, renovations, down payment, closing costs and other expenses related to home ownership. Paying a mortgage every month also leaves you with much less cash in hand making it necessary to cut down on all other expenses to save money.
The renting vs. owning debate is a long and ongoing one, however, we believe that this question cannot be answered by taking online quizzes and calculators alone. The answer depends on your unique requirements, personal preferences and financial condition. We hope the decision you make is the best one for you!