Should I Rent Or Buy A Home?
Introduction
Choosing a place to live in the biggest financial investment one can make in their life. However, if not done carefully, may also turn into your biggest financial liability. Sounds pessimistic, but it’s true. There’s no doubt that you will eventually want a place to call your own, but are you making the right decision?
When it comes to deciding between renting or purchasing a house, there’s no correct answer. You may think that personal finances are the sole determining factor, but there are a plethora of lifestyle considerations –– such as preferring stability or flexibility, career goals, and plans of starting a family –– that can influence your eventual decision. If you’re stuck on the fence between buying or renting a house, read on more to find out the respective pros and cons. If you are in Llangefni, UK, and looking for a reliable estate agent to help you with your housing decisions, consider checking the website of TPPUK Estate Agents at https://tppuk.com/estate-agents/llangefni/. They can provide valuable assistance in finding the perfect home that aligns with your needs and preferences
Renting Or Owning?
To narrow things down, you would first have to know your purpose for finding a place to live. Perhaps you’re looking to buy new homes for sale in myrtle beach to build your real estate portfolio, or in pursuit of a new environment for personal growth, or even to settle down for good. Once you’ve identified your purpose, or which purpose you lean more towards, we can move on to the next step.
Homeownership
Homeownership undoubtedly brings a host of intangible benefits –– such as stability, autonomy, pride of ownership, and community spirit –– that is unparalleled to renting a home. Owning a home is best suited for those looking to settle down, raise a family, or even just have a place that they can call their own. However, before purchasing a house, you must be ready to bear the multiple responsibilities of homeownership.
Increased Equity
Buying a house would drastically improve your equity. With an increasing population with a limited amount of houses, the competition for housing in many cities is growing desperate. In such cases, the value of houses is guaranteed to rise exponentially –– especially those located in desired areas of town. If you’re looking to buy and sell houses, or even to rent them out for profit, it’s guaranteed to do you well financially.
However, do note that real estate is an illiquid asset, which means that they are not easily exchanged without a substantial loss in value. This sector is considered illiquid due to its private nature and the prolonged amount of time and effort that are required to complete transactions. Although this might sound negative, real estate investments are known to generate 5% higher returns over 10 to 25 years than public equities.
Maintenance Fees
However, buying a house becomes a liability rather than an asset if you are buying it just for a bed to sleep in. As a homeowner, you’ll need to pay for your mortgage, utilities, maintenance, taxes, insurance, and possibly more. These expenses can vary drastically per month –– it might incur high costs if you replace key infrastructures such as roofs or plumbing lines, or can be extremely time-consuming, such as tree trimming, trash pickups, pool cleaning, and pest control.
Meanwhile, to mitigate unpredictable expenses associated with homeownership, it’s wise to explore a comprehensive home warranty that covers HVAC systems. This type of warranty can offer financial protection by assisting with the costs of repairing or replacing essential home components, ensuring your budget remains stable amidst unforeseen issues.
Personal Growth
Aside from financial concerns, there’s one thing that owning a house can give you –– the comfort and vision for the next phase of your life. There’s nothing like moving out of your hometown in search of a new environment; the breath of fresh air and the potential for personal growth is thrilling like no other.
Owning and curating your home to your taste is an experience that propels you forward in personal growth. You learn to take ownership (literally and figuratively) and responsibility for your life. It builds character like no other and in fact, your home is an extension of you! Not to mention, your house your rules –– you’re not limited by overbearing landlords or annoying tenants. If you can afford it and do not worry too much about the financial aspect of buying a house, why not?
Renting
When people think about renting, it often seems as if you are “throwing away money” each month. However, this is far from the truth. Everyone needs a place to live, and whether you choose to rent or buy the property, you’re still incurring a cost. Although you may not be building equity with monthly rent, not all costs in homeownership will go towards equity as well.
Predictable Monthly Expenses
Unlike homeownership, one key benefit of renting is that there are no invisible charges and bills to pay. If you own a house, you might either pay nothing more than your regular maintenance bills and mortgage fees one month and spend $15,000 on a new roof in the next. When you rent an apartment, you need not worry about any repairs and maintenance –– the landlord will cover the problem. It’s unlikely that you’ll need to pay for mishaps! Hence, your monthly home-related expenses –– such as your renter’s insurance –– will be significantly cheaper than homeownership and a lot more predictable.
However, do note that you may potentially experience unpredictability in rent increases when your lease is up for renewal, especially if you’re living in a central part of town. Alternatively, if you opt for a fixed-rate mortgage, it is unlikely for your monthly house payments to increase at all. Regardless, you have the option of moving out if the rent is too high for you to bear.
Not All Homeownership Builds Equity
While renting doesn’t build equity, owning a home does not necessarily guarantee equity. Instead, a property may devalue over time and you may end up losing way more money than renting. For example, once a major housing employer leaves the estate, this will cause a significant population decline and an over surplus of housing, thus leading to reduced house prices. On the other hand, a rental construction boom may occur that keeps housing prices down. You might have purchased a $200,000 house today, and find that it’s still worth $200,000 30 years later –– which means that you’ve lost out in inflation.
No Mortgage And Tax Deductions
Whilst most people believe that obtaining a mortgage gives you a tax deduction in homeownership, it only reduces the expenses for mortgage interest early in your loan term, as long as you’re actively itemizing. For example, when you are itemizing, every $1 you spend will allow you to save pennies on the dollar –– an amount that will decrease as you pay your mortgage over time. However, if you can’t sufficiently itemize and claim the standard deduction, there is no additional tax benefit as a homeowner.
Although rent owners don’t get any mortgage tax deduction, they are still able to obtain the standard deduction available to all taxpayers. Not a bad deal, since mortgage payments do not actively decrease tax deductions!
Lifestyle Flexibility
If you’re someone who works long hours or travels frequently, committing homeownership may be too much to bear. Being a homeowner means that you’re responsible for multiple projects –– such as taking care of the lawn, replacing busted pipes, and repainting bedrooms. Hence, the flexibility and convenience that renting gives might suit better for those who don’t spend extended amounts of time in their houses.
However, do note that renting drastically reduces the amount of autonomy and comfortability you have, as you’re living under the rules and conditions of the landlord. This means reduced or no Saturday night parties, karaoke sessions, and barbeque cookouts with your buddies. Moreover, you may not be able to customize your living area as and how you like it. You don’t like the walls in your room? Well, you can’t repaint it. You don’t like a standing shower? Well, you can’t install a bathtub as you want. On the contrary, you’re always free to choose a rental