When choosing a new home, tons of questions may pop into your mind, but the first one might be “should I rent or buy?” The answer to that question depends on a number of factors, including your own finances and attitude toward property. While we can't make that decision for you, we can walk through it with you to maybe help you reach a decision. Let’s start by digging into the pros and cons of each!
Like we just mentioned, both renting and buying come with their pros and cons. buying a home has so many advantages and upsides. Read more to learn about the pro's of buying a home!
Home equity is perhaps the biggest pro for buying a home, but what even is home equity? To put it simply, home equity is the portion of the home that you own, or have paid down on your mortgage, which is an important asset for later in life.
When buying a home, the down payment is your home equity. The bigger loan you need to take out to buy a home, means the smaller percentage of the home’s total value is yours. A bigger down payment (and smaller loan) means you have more assets.
Your home equity can increase by paying down your loan, by improving your home, or by the real estate market increasing. A lot of home equity can be used as a retirement fund or a long-term payment option, such as buying a car. Once you’ve done the hard work of paying down your home-loan in thirty years, the property is all yours. This is a tremendous security for your family and finances.
Even while paying your loan off, the home and property is yours and you can do whatever you want with it. As an owner, you can make decorative decisions, architectural decisions, and more decisions that renters just can’t. You also have the ability to call in repairs with the company of your choosing, whenever you need them. Whereas if you are renting a home, you have to wait for the landlord to call in their own handyman to fix a problem, which could take all day or more.
We touched on a few pro's of buying a home, but there are also a few con's. Let's learn more!
Let’s face it, buying a home is expensive. Since banks don’t want to lose money, they won’t give out loans to just anybody. Coming up with a solid down payment is a big part of the home buying process. Getting a down payment can take a very long time and requires a long-term saving plan and being honest about what your income allows. If you are renting a home, coming up with a down payment is not something you have to worry about and is really something to take into consideration if you are considering buying a home.
Unlike a rental property, a homeowner is totally responsible for all upkeep on the property. Depending on the age of the home and how well it was built, these costs can be minimal or expensive. Investment repairs like roofs and plumbing can fall in your lap when you least expect it, which is a very costly repair. A home that’s less expensive to buy might be full of repairs and could potentially cost you a lot of money in the long run. Have a potential home appraised independently so you know what to expect in five or ten years and be prepared financially.
We just touched on a few pro's and con's of owning a home, but just like owning, renting a home comes with it's own pro's and con's. Read on to learn more!
In general, while you are responsible for some expenses, a rental property’s upkeep is mainly handled by your landlord out of his or her pocket. A good landlord has a dedicated team of experienced handymen. The cost of calling in repairmen often includes the quote before the work is done, but a rental handyman is paid by the landlord. For a lot of people without a handy bone in their body, this is a huge relief!
Renting gives you the ability to move to a new unit or even area when your lease is up without much trouble on your end. If you’re not totally attached to where you're at or you just get bored, then you might enjoy the excitement of packing up every few years and exploring a new area. Buying a home really limits you to staying in one place for a fixed amount of years.
When it comes to renting, the initial payment is not nearly as costly as setting aside a ton of money for a huge down payment. It allows more people to break into independence because you can settle right in rather than saving for years to come up with a down payment for a home. However, you’re putting that money into someone else’s pocket and rent could go up when you least want it to. In the long run, renting is more expensive than buying because you’re not building your equity, but is cheaper in the short term when you aren't looking for something long term or permanent.
Finally, we have reached the con's of renting a home. Like everything, there are always some con's. Read to learn more!
Financially, renting takes a toll on your stability. As we mentioned earlier, home equity is the amount of a property that you own, and renting for years and years means you never build any of your own. That money you pay to the landlord is going towards his or her equity, not yours. If you’re concerned about having a nice back-up emergency fund built into your home, then renting may not be the best fit for you.
Finally, landlords don’t want to lose money so they generally limit how much you can modify your unit. Some are stricter than others, but in general they want to minimize how much they need to change when you move out. Carpet, interior colors, layout, and even window dressings are all in your landlord’s hands. If you want to make the space your own, then renting is not the way to go. If you don’t mind your unit looking like your neighbor’s, then renting might be a good option.
All in all, moving into a new place is a huge decision for anyone no matter what stage of life you are in. Both renting and buying require a lot of work to find the perfect place, but we hope we have made your decision a little easier with these tips. Solar Art might not be in the home rental or buying business, but we deal with homeowners everyday when it comes to window film. If we can help you at all, please don't hesitate to reach out and speak with one of our representatives!
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