June 22, 2016

Buying VS Renting: What You Need to Know

 Buying VS Renting: What You Need to KnowThe decision to buy or rent a home torments the mind of everyone who is looking for a new home. With the ever increasing rents in the big cities and the short supply of rented properties, homeownership seems like an attractive option. Determining costs of purchasing a property is complicated and varies from one case to another. That is why it is hard to tell if buying or renting is the better deal, when moving house to a new place. Whatever your case is, you need to compute the costs of homeownership and compared to the equivalent monthly rent. To help you make the right decision, we’ve compiled the pros and cons of renting and buying.

Renting

Advantages:

• Easy maintenance

In case of property damages that are not caused by you, the landlord is responsible for fixing them. Even if you need to cover the repairs, you will pay far less for the maintenance of rented home.

• Flexibility
One of the greatest advantages of rented property is that makes relocation easier. When you are not settled in a certain place or into a specific career, you have more freedom to switch homes and move.

• No depreciation
Buying a property is a big investment. With years the value of your home may decrease depending on the market conditions. When you rent a property, you void the risks of an uncertain real estate market.

• Low upfront costs
When signing a lease, you only need to pay the month’s rent in advance and a deposit. Compared to the expenses of buying a property, the fees for renting a home are peddling.

Disadvantages:

• Increase in monthly payments
Your monthly payments may increase once your lease ends due to the rising rents in the urban areas.

• No home equity acquired
During the time of the lease you only pay for a place to live and you don’t acquire any assets that you can later sell.

• No tax benefits
Home owners can benefit from considerable mortgage interest payment and tax deductions, which ultimately reduces the cost of ownership.

• Limited rights over the property
You can’t paint or remodel the property without the owner’s approval. Although some landlords are kind enough to let you make some improvements, this is not always the case.

Buying 

Advantages:

• Increased equity
Unusually homes tend to rise in value. You will be later able to use your property as an investment and sell it or rent it to generate income.

• Tax benefits
As a house owner, you can take advantage of the tax deductions to offset the costs of your property.

• Stable housing payments
With a fixed-rate mortgage the interest and the principal payments remain the same for the period of the loan. Your property taxes and the homeowner’s insurance may change.

• More freedom
The greatest joy of having your own home is the ability to modify it any way you like. If you live in a place with homeowner’s association, you will have little less freedom over the exterior of your property.

• Opportunity to settle in a community
Once buying a home and moving house to a certain place, you can get involved in the community.

Disadvantages:

• Higher initial investment
You will probably need to sacrifice your savings for a downpayment and other costs, limiting your ability to use the money for other investments.

• Higher costs
The costs related to buying a home are much higher compared to your rent expenses. You need pay downpayment, closing costs, mortgage-interest cost, as well as maintenance and fees in the future.

• Hard to sell
Selling a home takes time. Depending on the real estate conditions and your circumstances, you may need to sell your property below its market value. If you are not planning relocation soon, then you may consider homeownership as an option.

• Decreasing value
There is no guarantee that your home will not decrease in value.
Finding the ideal option for you and moving house to your new home will take some time and effort. With a little patience and thought, you spare yourself the troubles and make the right decision.

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