Pros and Cons of Home-Ownership
Purchasing a home is one of the biggest decisions an individual can make during their lifetime. When figuring out if you should purchase a home, there are pro’s and con’s of each. It’s best to consider the advantages of both buying and renting when deciding to occupy a residence. An individual must look at their situation in order to make the right decision regarding their options.
Here are some things to ponder on when considering your option of renting or buying a property.
Advantages of Renting
- The initial investment to occupy a residence is significantly cheaper than it costs to obtain a mortgage on a property unit.
- If you are deciding to rent for less than 5 years, you’ll be paying more than if you’d of rented.
- As a renter, there is limited liability on the property because you don’t own it. The landlord or property manager has to take care of any costly repairs.
- There’s not property tax that has to be paid annually.
- Since most leases tend to be short term, renting gives you more flexibility.
- Renter’s insurance is cheaper because you just have to insure the contents of the property, not the real estate itself.
Advantages of Buying
- When you buy a home, you’re gaining equity of a period of time. As the mortgage is paid off, the equity increases as well. It’s like you’re putting away money by force.
- When you buy a home, it becomes a capital gain over time. Many markets are setting records for increases in value.
- They buyer has more control over the property.
- Tax advantages are given to the buyer. $10,000 deductions in property taxes and up to $750,000 of mortgage debt can be itemized for deductions on said property.
- Your credit rating is positively impacted when mortgage payments are paid in a timely manner.
- The best one to me, is you’re getting to make your own rules on your own property.
- When you sell a home, you get the benefits of a capital gains tax break if you’ve lived on the real estate for longer than a year.
- In emergency situation, you can take out a second mortgage on your property, buy borrowing from the equity that’s accumulated over a period of time on the house.
- There is a way to turn you house from a liability to an asset by renting your house out. The easiest way to do this is by renting out part or all of the property for a monthly fee.
The main factor though when making this decision is affordability. Many financial experts suggest buyers to keep their monthly payments to a third or below of their income. Now I’d like to talk about the disadvantages it comes regarding the topic of renting versus buying.
Disadvantages of Renting a Home
- There’s not long term commitment associated with renting a property unit.
- Low to no maintenance and repair costs.
- Lower initial payment invested to occupy the unit.
Disadvantages of Buying a Home
- You have to commit longer to the property.
- You’ll have to maintain maintenance and repair costs.
- It’s more expensive than renting.
- The up-front costs of acquiring the property are substantially more than renting.
- It’s actually considered a liability until you decide to sell a home.
In conclusion, when asking is this the best time to buy a home, there are many things to consider. Buying a home is great when you have the intention of keeping the property for a long period of time. With the tax advantages, security, freedom, equity building and sense of belonging to a community, home ownership is a quest for most Americans. Simply the act of purchasing a home doesn’t in-itself make a good decision. There are many money saving strategies you should utilize when you purchase a home.
Owning a home a considered part of the American dream, but it’s becoming an expensive one. In today’s market, people are weighing their options when it comes to renting or buying based of their individual needs.