Rent vs Own - The Reality Checklist for Avoiding Rookie Mistakes

Rent vs Own

To buy or to rent a house that is a question that many people struggle with when deciding the best living situation for them When choosing whether to buy or rent, a person should assess their lifestyle, personal goals, and financial situation. While many consider buying a home to be the ultimate dream, it entails a long-term commitment that might not be ideal for everyone’s situation So, before you decide on which one is right for you, read this reality checklist to avoid rookie mistakes!

While many people think that renting is like throwing your money away, it’s actually not true We all need a place to live and that costs money either way. Renting can actually be ideal for people who are just starting out. Without savings, it will be hard to buy a property that requires down payments and closing costs While for some, their lifestyle or job might require them to move often Wondering if renting is right for you? Let’s take a look at the pros and cons of renting

Rentingahome Pro

You don’t need to commit long-term. When you are renting, you won’t have any long-term responsibilities on the house you are renting. You are free and flexible to move wherever you please without penalty after your lease ends You’ll have no responsibility for repairs or maintenance. As a tenant, you’ll have no responsibility in repairs such as plumbing or HVAC issues Your landlord will handle all the repairs and cover the expenses.

It could be cheaper than owning. Depending on where you live, renting can be cheaper than owning When you buy a house, you’ll need to pay for your mortgage, closing costs, and any repairs that come along your pay You might also need to pay for property tax, home insurance, home maintenance, not to mention HOA fees. While those expenses can be cheap in some areas, it can be really expensive in other more high-demand areas.

No down payment Unless you are eligible for loans that can give you zero down payments when buying a home, you’ll need to have at least 5-20% down payment on hand That would be around $15,000 to $60,000 for a $200,000 home. When you choose to rent, you’ll only need to pay for a month deposit and your monthly rent rate.

You won’t be able to build equity. The biggest advantage to owning a home is building equity Building equity means building long-term wealth It means gaining more value in the property than you owe, and being able to sell that property for profit in the future

You landlord can raise rent or decide to sell property. You might have less stability when renting as your landlord might unexpectedly decide to sell the property or even just decide to raise your rent While renters are protected in many cities, there are still places without laws protecting renters from sudden price hikes

You might experience restrictions. Your landlord might have a set of rules that can restrict your way of living. For example, you might not be allowed to have any pets, paint the walls, or hold a barbecue

You’ll have no tax benefits. Having your own home can give you tax breaks, however, you won’t experience this benefit when you’re renting

Owningahome

Owning a home is a long-term commitment It doesn’t end once you’ve closed the deal and acquired the property title. Of course, nothing beats the feeling of stepping inside your own home for the first time. It is definitely a milestone and has its own perks but it also has its downsides

It gives you privacy and total control. Enjoy complete privacy as no one will have to check your unit from time to time Also, no need to ask permission from a landlord if you want to make modifications in your living space

It provides stability Unlike when renting a home, you will be able to stay in your home for several years. So if you are looking for stability, purchasing a home can be good option. You can even pass it down to your children.

It’s a good investment and helps you build equity By paying a mortgage instead of paying a monthly rent, you get to build your equity You can use your home equity should you need help in financing other things like your children’s education or when paying debts. And since a property’s value increases over time, you get to have higher equity.

It improves your credit score Although taking out a loan to purchase your home will put a slight dent on your credit score, you can redeem yourself by paying your mortgage on time. When you regularly make your mortgage payments, it can eventually raise your credit score as it will look like a responsible debt

It can be expensive. The cost of buying a home can be overwhelming as it has higher upfront costs than renting The downpayment alone needs a lot of preparation.

You are your own property manager. Unlike when renting, property maintenance and utilities will be part of your responsibilities If an issue comes up, you have no one to count on but yourself The responsibility of hiring professionals to help you with your property issues is on you

There are other costs that need to be considered. Aside from the purchase cost, you need to consider the utility and maintenance costs as well as property taxes, insurance, and association fees

Relocating can be difficult. If you are planning to switch jobs and relocate soon, buying a home might not be the best option Owning a home is best for people who plan to settle down in a location for a longer period.

RentvsOwn:Questionstoaskyourself

Should you rent?

To know if renting is the right option for you, ask yourself these questions:

Am I planning to live in the home for a shorter period only? Are there other financial responsibilities that I need to prioritize?

Do I prefer having someone take care of the maintenance and utility concerns of the home?

Am I okay with not having full control of the place I live in?

If you answered ‘yes’ to these questions, then renting would be the right choice

Should you own?

To know if owning a home is the right option for you, ask yourself these questions:

Do I have enough savings (aside from your emergency fund) to finance the purchase?

Have I saved enough money to make at least 20% downpayment?

Do I have a good credit score?

Am I planning to stay in my chosen location for a long period of time?

Am I ready for all the responsibilities of being a homeowner?

Am I prepared for all the costs that owning a home entails?

If you answered ‘yes’ to these questions, then owning a home is the right track to take.

Now that you know the difference between renting and owning it’s time for you to decide which one is right for you! Remember, take time to assess your financial situation Setting longterm goals in the future and weighing the risks might also help you when deciding

Once you’re ready to buy a home, give us a call at 434-531-0817 or send us an email at contact@yesrealtypartnerscom so we can help you find the right property!