A 2020 survey reported that the rate of homeownership in the U.S. is at 67.4%. While many people would wish to be homeowners, the dynamics with homeownership can be limiting. Renting is another great option that one would consider.
The idea of renting vs owning a home is a dilemma for a number of people. Both choices have their upsides and downsides, which you need to understand if you’re wondering about your most ideal option. The choice to buy or rent depends on individual circumstances.
If you have been trying to compare renting vs. owning a home to know what would work for you, this guide will be resourceful. Keep reading to learn your most suitable option between owning a home and renting a home.
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Advantages of Buying a Home
The question ‘should I buy a house?’ is one of the common queries one has when thinking about their family’s comfort. Buying a house is amongst the most priced investments that people make. Given the benefits of homeownership, it’s not surprising to see people prioritizing house buying as part of their goals.
Building Equity
Buying a home enables one to build equity over the years. When you pay your mortgage, a portion goes to the loan’s interest. The remaining amount pays the principal, which is what amounts to your equity.
At some point, you can then use your equity to refinance your ongoing mortgage or get a home equity loan. The equity you accrue can also help in improving your home for increased value.
Tax Benefits
With home buying, you’ll enjoy tax benefits. These benefits include the federal tax deduction, which helps to reduce your income tax burden significantly. The homestead exemption is another tax benefit that homeowners enjoy as states exempt them from the property tax burden.
A Sense of Community
Owning a home gives people a sense of community and belonging. Unlike renting, homeownership is more long term. Some homeowners tend to join the community, but a person likely to move in a year or two might lack the motivation to engage in community-bonding activities.
Creative Freedom
When comparing renting vs owning a home, creative freedom is a factor that one can’t ignore. A homeowner has the liberty to make any home improvements or changes as long as it’s within the building codes. You can change your interior and exterior as many times as you want to ensure that your space matches your vibe.
Given these advantages of owning a home, it’s clear that the option is quite ideal. You might want to find rent to own homes if the down payment in homeownership is daunting. For those who can manage to own a home, the benefits are worth the investment.
Disadvantages of Buying a Home
One of the main shortcomings of home buying is the financial aspect. Buying a home is one of the most expensive ventures, and the cost can leave one financially drained. Worse still is that you might end up losing money if the value of your home is declining.
With home buying, you’ll be solely responsible for everything. From repairs to remodeling, which can be quite overwhelming along the way. You have to be ready to address any issue concerning the house once you own it.
Advantages of Renting a Home
In a comparison between renting vs. owning a home, it’s easy to assume that buying outweighs renting when it comes to merits. On the contrary, renting has significant advantages that can guide you when making this crucial decision.
Minimal Credit Requirements
Mortgage lenders have high standards for credit score before giving out the loan. If you want to qualify for a mortgage with the best rates, you need a credit score of at least 760. With renting, you can get away with a lower credit score.
Minimal Repair or Maintenance Responsibility
Renters have minimal responsibility when it comes to home repair and maintenance. If you have a leaking wall, a call to the property manager is enough to have the issue sorted. Not unless you want to deal with the repair person, you’re not accountable for such matters.
Ease of Relocation
If you’re in a dilemma on renting vs owning, the flexibility on matters relocation can help you decide on the ideal option. Renting allows you to relocate quickly, which is an advantage, especially if you keep changing jobs. On the contrary, selling a home when a relocation need arises can be demanding as you’ll end up selling the house at a lower value.
Disadvantages of Renting
Renting has several undeniable disadvantages. If anything, most of these disadvantages make buying a home seem like a better decision than renting. You might want to weigh these cons of renting against the benefits to see if the option is the best.
For renters, federal tax benefits are non-existent. You are not eligible for any federal tax deductions or benefits regardless of your commitment to paying rent. In fact, you might have to deal with a higher federal tax liability.
Renting also doesn’t build any form of equity even you stay in an apartment for years. You might want to consider the buying option, especially if you intend to stay in a particular location for years.
As a renter, your housing security is quite limited despite the renter protection laws that safeguard you from unlawful eviction. However, a landlord might fail to give you an option to renew your lease. This situation makes it hard for one to be fully confident that the home is secure enough.
The Option of Renting vs Owning a Home Is a Dilemma for Many People
Given the pros and cons of renting vs owning a home, it is easier to make a decision. You can weigh the benefits and the downsides to establish which option is more suitable for you. Affordability is one of the central factors that can guide you in deciding on the ideal choice.
Homeownership is an outstanding achievement. However, you shouldn’t be wary about renting as it also has some exceptional advantages. You can embrace your rented apartment as you get closer to owning your dream home.
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