Real Estate Extra Credit
Renting vs. Buying
Picking a place to live is one of the biggest decisions we make in our lives. It is a decision that is not to be taken lightly and must be planned out way in advance. One thing you need to decide is whether you want to buy or rent a home. There are pros and cons of renting and buying a home; and you need to be able to decide logically what is going to work best for you.
There are many different things you need to access at when picking a place to live, but the most important thing you need to access is yourself. You need to see where you are at in your life and make sure that your making a wise decision. The first thing you need to look at is your job. You need to make sure that you like your job and that you are going to be working in the same location for the next few years. You also need to make sure you have job security that way you will be able to keep up with your payments. Another thing people need to consider is their personal lives. Your age and relationship status are major factors that need to be considered when deciding where you live. For example a single 26 year old probably doesn’t need to live in a big house with three bathrooms; but a married 26 year old with a baby on the way does. You also need to look at the housing market and decide whether or not it is a good time to purchase a home. You don’t want to buy a house that is at its peak-selling price, because if you ever decide to move you will probably lose money in the sale.
There are many different pros and cons when it comes to renting and buying a house. One pro to renting is that you have more flexibility. You will be able to move if need be, and breaking a renting lease is much easier than selling a house. Another pro of renting is that you will have more liquidity. Renters don’t have to make a down payment, pay closing costs or deal with real estate taxes. By not having these costs renters are able to use their money to invest in the stock market, which sees an annual growth rate of over five percent. It also allows them to invest in IRA’s and mutual funds. Renting also gives you time to establish credit. “By creating a history of on-time rental payments, you can help yourself build good credit that you would need to qualify for a mortgage.” (1)Renters also have fewer financial surprises. For example if you’re renting a home and the roof begins to leak you don’t need to fix it your landlord does. It is typically the responsibility of the landlord to take care of common household maintenance and common wear and tear. Since renters don’t have to worry about these problems they are able to spend more of their time doing things they enjoy, it also allows them to save more money to put towards a down payment on a home of their own.
With the pros of renting come certain cons as well. One downfall of renting is that you have no equity. You are essentially paying your landlords mortgage in turn for a place to live. This is not considered an investment because it is temporary. Another con of renting is that renting prices may increase over time. Unless you’re in a rent-controlled apartment, you have no control over how much your rent increases each year. Your landlord can raise your rent as much as he or she wants. If you don’t like it, you will be forced to move. You also have fewer freedoms when renting a property. Landlords may not allow you to have pets such as dogs or cats in the dueling. They may also not allow you to paint the walls making it much hard to personalize you living space. Also if you are renting an apartment you will probably only have one or two parking spots making it much harder to have gatherings.
There are many pros when it comes to buying a home. “Pride of ownership is the number one reason why people yearn to own their home.” (2)This means that you can paint the walls any color, play your music as loud as you want, and have privacy. Owning a home also...