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I doubt that you will find a hotter and more discussed financial topic. Everyone seems to have a different opinion, and those who agree on one matter, disagree on the other. If you are a non-homeowner, you will probably believe you would be better off with a property of your own, but is this always so? Not necessarily, it all depends on your particular circumstances.
So, the question is, is it better to rent or to buy? There is no easy answer to this question. As a matter of fact, there might be no universal answer at all. The general rule has it that it is nearly always better to own a property than to rent one. Not only do you have something to fall back on, but you also have the equity on your house. But if your income is not high enough to face mortgage repayment, or you lack job stability, or you are simply waiting for the perfect property to come along, then it might not be a bad deal to rent for some time.
Pros And Cons Of Homeownership
Having a home of your own is a goal most people share and is part of the “American Dream”. Most might feel they have to own a property no matter what, without pausing to analyse whether they can afford it or not. But let us get real, being a homeowner brings about countless benefits. On the other hand, it also has a number of disadvantages many tend to disregard. Here we will discuss both sides of the same story.
a) As you begin to pay off your mortgage, equity will build on your home. This is independent of the market value variation. But the equity might increase or decrease depending on many factors.
b) Your property is your and nobody else’s, and you can do with is what you please (paint it, redecorate it, retile it, etc.). Then again, money destined for home improvements will come out of your own pockets, naturally.
c) Even though you need to make a high initial payment (known as down payment), you might be able to get some sort of tax benefit in the future.
d) If you decide to move, you will most certainly have to sell the property.
Pros And Cons Of Renting
Yes, renting does have advantages to it. And as people disregard the downside of homeownership, they tend to ignore the benefits of being a tenant.
a) Watching the equity on your home decrease can be painful. As a tenant, this will never happen to you. But of course, you will have no equity at all.
b) There is a limit to the number of renovations you can perform on the property you live in (if you can perform any at all). However, home improvements will be paid for by the landlord.
c) If you are short on cash and you cannot afford an expensive down payment, then brighten up, renting carries little-to-no upfront payments.
d) Provided you wish to move house, you can do it in a matter of days by finding another rental property.
I hope you have found this article helpful, it seeks to be an easy guide to the renting or buying dilemma. Now that you have a wider panorama, it will be easier for you to make up your mind. |
