There is a point in everybody’s lives when they start asking themselves this question. The moment usually comes when you have had your current job for a while and wish to gain even more independence by purchasing real estate. However, it’s not really that simple and there’s more to renting than just remaining in your comfort zone. Here are the reasons for and against to help you make up your mind.
One of the biggest reasons why renting seems so appealing are the unpredictable fluctuations in the real estate market. Generally, rent prices do not increase dramatically overnight, so it is easier to plan your expenses. Governments can, in some instances, also encourage lowering rental costs for families. On the other hand, anyone who’s ever thought of buying a house knows finding the best moment for the purchase is rather tricky. There is no absolutely reliable forecast despite all the market analysis. Be very keen on selecting the location of the house. There are online sites that can guide you about the cheapest neighborhoods in Manhattan. Everything can change in a second and you may end up paying a lot more than you originally hoped for.
Believe it or not, but renting pays off in the long run. Once everything is taken into consideration, renting a home is much cheaper than owning one. First of all, there’s the mortgage interest, as hardly anyone is able to buy a house in cash. Even with the best offers, you will still owe more than the house is really worth. Then, let’s not forget all the paperwork and fees one has to cover before moving in, such as closing costs and lawyer fees, and all those regular expenses after moving in, like property taxes, flood insurance, repairs, homeowner’s insurance, and so on.
Instead of spending your money on all of these, you could be earning it. For example, the money you might have allocated for a down payment can instead be put into an interest savings account, thus getting high returns that you can invest elsewhere. Alternatively, you can also make it account for that deposit, as long as you have patience.
When you buy a home, you are pretty much tied to one particular place, which can become a problem at some point. While settling down in one place sounds great, it may happen that you find a better job elsewhere, or you would like your children to go to a school they aren’t entitled to because they don’t belong to the correct area.
Due to all of these, it is no wonder more and more people of a certain age are opting for renting (forever). Namely, in some countries, such as Germany, a big part of the population traditionally rents their accommodation. We see a similar situation on the other side of the globe, where according to a recent Lendi survey, one in five Australians is keen on renting home all their life. Most of them belong to Generation Y, so we can expect the figure to rise in the coming years.
But, home ownership has certain benefits, too.
As long as you are renting, you’ll have to obey the landlord or landlady. That is no problem unless they start inspecting your home/their property more often than they should. In addition, if you would like to improve the exterior or interior of your home, you always have to ask for permission and hope that your tastes in home decor match. Also, it is the landlord/lady who chooses the contractor for some large scale projects. Therefore, you don’t have much say in what is being done with the property, while you’re renting.
If you wish to be the king of your castle, buying real estate is the only option.
While it’s true that rental prices do not rise and fall as frequently, buying a home gives you the stability that renting can never achieve. A tenant can never know when they can be evicted because the owner has sold the place. This is something completely unpredictable and it can bring real chaos into your life. Furthermore, there is also a chance of you not being able to stay in the same neighborhood if such an event takes place.
Even though you have lots of fees to pay, the fact that you possess some property may bring you certain perks when it comes to taxes, so you’ll be paying less than if you were renting. And let’s not forget the magic word – equity.
To sum up, there are enough good reasons for you to deliberate both options thoroughly. Essentially, every person and family have different priorities, so it’s time you determined your own before making this decision.