Rent VS Buy
Deciding whether to rent or buy is a complicated financial and emotional decision. In some cases, it does make financial sense to buy a home. But in other situations, renting is the better choice. And often, there's not a lot of difference between the two, especially if you're smart and keep costs low. The decision usually comes down to personal preference. Let's take a brief look at the pros and cons of each.
Here are the advantages of owning your home:
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Stability. When you take out a mortgage, you know what your payments will be for years to come. There's no landlord to change the rules, and you don't need to worry about being kicked out at a moment's notice.
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Equity. As you make your mortgage payments, and as the property's value increases, you build equity, which is the difference between what you owe on your house and what you could sell it for.
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Freedom. You can do what you want with your home and yard, like plant a garden, paint the ceiling purple, or install a wet bar in the basement.
On the other hand, the advantages of renting include:
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Flexibility. With a rental, you don't have a long-term commitment. You can move on short notice, whether to get away from bad neighbors or to take advantage of lower rents elsewhere. There's also a wider range of rental options than homes for sale. It's difficult to buy a tiny house, for example, but you can easily find one- or two-room rentals.
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Lower costs. The annual cost of owning a property, be it a house or a condo, is usually greater than the cost of renting, after taxes. You don't build equity when you rent, but you're not burdened with taxes, insurance, and maintenance costs either. You can use the money you save to travel or buy stocks.
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Lack of responsibility. When you rent, somebody else does the yard work and repairs the leaky showerhead. (Of course, this can be a disadvantage if your landlord is slow to respond to problems.) All you do is stick to the terms of your lease or rental agreement and someone else takes care of the rest.
Both sides of the rent vs. buy argument can trot out numbers and statistics to prove why they're right and the other side is wrong. The bottom line is that the decision isn't just a financial one, so it's hard to generalize. Yes, renting can save you money and it comes with far fewer hassles than owning. But owning your home can give you non-financial benefits.
The best way to decide is to think about your goals and figure out what makes sense for you. Ask yourself these questions:
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How long will you stay in one place? The longer you plan to stay put, the more sense it makes to buy a home. Buying lets you recover your costs and build equity.
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How do costs compare? You can use rent-vs-buy calculator and crunch the numbers. It let you plug in numbers for your situation, and then shows you how long it would take to break even with buying.
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How would you spend the savings? When renting is cheaper, you can use the money you save to pursue other goals. Sure, you could spend the cash on purses and videogames, but you'll be better off in the long run if you use it to fund your retirement, budget for a new car - or even save for a down payment on a house.
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How do you feel about homeownership? For some, owning a home is a piece of the American Dream. For others, the chores and maintenance are a nightmare. Your feelings about homeownership are just as important as the financial stuff.
The decision to rent versus buy can become difficult. Use this calculator to help determine which makes sense for you at this time.
So, take a step in the right direction and contact Swift Realty today.
