If you’ve been renting for a long time, there’s no doubt you think about how much money you’re losing every time you write your landlord a rent check. As such, you might wonder if owning a home would be a better investment. Your concerns make sense, as each time homeowners make payments toward paying down their mortgages, they are building equity in their homes. With that said, however, does that mean that it is better to rent than own a home? While it might seem that it is better to own a home, the truth is, it isn’t as cut and dry as it appears.
Is It Better to Rent or Own a Home?
To help you determine if it’s better to rent or own a home, take a look at the pros and cons of owning a home vs renting.
Pros and Cons of Renting
Maybe you’ve heard that putting your rent money toward a mortgage purchase is the better option. Though it does seem to be the more logical choice at first glance, the fact is that renting can be more beneficial than owning for some people.
Pros of Renting
While you won’t build wealth via equity when you rent a home, there are some definite benefits to renting that you won’t be able to take advantage of when you own a home. These benefits include:
Freedom and Flexibility
One of the biggest benefits of renting is the freedom and flexibility that it offers. Perhaps you move regularly for work, you just don’t know where you’d like to settle down, or you’re the kind of person who likes adventures and doesn’t like to be tied down.
If any of these types of scenarios describe your situation, renting makes more sense than buying a home. Leases only last a year or two, therefore, if you have to move sooner it’s a lot easier to break a lease than it is to sell a house.
When you rent, the landlord is responsible for most of the maintenance; the big maintenance jobs, at least. For example, if there’s a problem with the air conditioning, you won’t have to deal with the frustration of figuring out how to fix it, and you won’t have to deal with the expense. Instead, just call your landlord and they will take care of it.
No Taxes or Insurance Premiums
As a renter, you aren’t responsible for paying property taxes or premiums on homeowner’s insurance policies. If you rent, sharing the space with roommates can help to cut your costs even more.
Cons of Renting
Despite the benefits, there are some definite downsides to renting.
Though it isn’t guaranteed that the value of a home will increase if you own it, you won’t have the chance to take advantage of this type of opportunity if you rent.
Unless you’re lucky enough to land a rent-controlled apartment or house, it’s likely that your rent will get higher and higher with every new lease you sign.
You might love your rental housing costs, but your landlord isn’t obligated to renew your lease. If they want to sell, rent to someone else, or live there themselves, well, you’re out of luck.
Pros and Cons of Homeownership
A house is one of the biggest investments most people will ever make, therefore, the decision to buy a home is a big one.
Pros of Homeownership
You’ll build your wealth with every mortgage payment. With each monthly payment to your home’s mortgage, you get closer and closer to full ownership. Long term, you could see a hefty return on investment.
There are lots of tax incentives available to homeowners. These tax deductions can put a good chunk of change back into your pocket.
When you own a home, you can customize however you’d like; something you can’t do when you rent.
Cons of Homeownership
Buying a home isn’t all sunshine and rainbows. There are some downsides to homeownership, including:
Upfront and Ongoing Costs
Homeownership involves more upfront and ongoing costs than renting. Upfront and ongoing monthly expenses can add up rather quickly.
While home prices usually increase, that isn’t always the case. You could lose a massive amount of equity in your home if your neighborhood becomes less desirable or if the housing market takes a hit.
Relocating isn’t as easy when you own a home. Selling a house is a complicated, often long and drawn-out, frustrating process.
Graves Development Resources | Land Developer in Omaha, Nebraska
Graves Development Resources (GDR) has been designing and building the market’s finest neighborhoods since 2000, with over 5,000 homesites and important commercial development projects throughout Douglas and Sarpy Counties.
Our pages showcase current neighborhoods where new home buyers may select from hundreds of home sites. We are definitely “phone friendly” and welcome the opportunity to provide you with all the information you need before making one of the most important decisions for your family’s future. Contact us with any questions.