Renting Vs Owning a house is a question which we have blogged in previous years. Here at Palm State Mortgage, we feel it is a major decision. Owning or renting the place you reside in will mark your lifestyle, budget, and savings forever. Yes, it will likely affect how much month is left at the end of the money-or vice versa.
Renting Versus Owning: The Big Debate
Whether to rent or to buy the place in which you live is a major decision. It doesn’t only affect how much money you have left at the end of the month, it also affects your lifestyle.
In any conversation about renting versus owning a home, you will find the pros and cons of both sides. On the one hand, some people buy a home because they want to stay in a particular area. Likewise, they see the purchase of a home as an investment for themselves and their families. They might even realize the home could save them money on taxes.
On the other hand, people rent because they seek the “flexibility and minimal responsibility it offers, even though they’d amass a larger net worth over time if they bought a place.”
A Closer Look at Renting Vs Ownership
Often we are inundated with positive propaganda about the American Dream of homeownership. We might feel like we have been brought up to see the house key as a key to happiness. The truth is that we cannot consider either renting or owning a home as being universally the best option for Americans.
“It’s big business for everyone from mortgage lenders to real estate agents to home improvement stores.” Thus, we are bombarded with the message that “being a homeowner is the key to happiness and part of the American dream.”
You see, at Palm State Mortgage we will honestly tell you that your choice to rent or own your home has multiple pros and cons. Although we are part of the housing industry we know:
- Owning a home is not always the best option for you, your family or your fiscal situation.
- Renting is not always isn’t always simpler or cheaper than owning.
- There are no absolutes. That is why it is a great debate. So let us give you the pros and cons of buying vs. renting.
Then, you can make the decision you want to live with.
Pros and Cons of Renting
1. Throws Money Out the Window
You’re “throwing away money” every month that you are paying rent. This may be one of the biggest myths concerning your monthly rent payment. This is not necessarily so. Firstly, you need a place to live, and that always costs money in one way or another.
Secondly, it is true that you aren’t building equity with monthly rent payments. However, much of the money you spend on owning doesn’t build equity either.
2. Foot-loose and Fancy-Free
Do you want to be Foot-loose? Are you planning on moving from state to state for your work or just because you feel the need to see what’s over the next hill? Renting means you can move without penalty each time your lease ends.
Perhaps not so glamorous is the fact that you be forced to move suddenly. This happens more often than we like to admit. The landlord could decide to sell the property or turn your apartment complex into condos. It’s also possible the owner could bump up the rent by more than you can afford.
3. Payday to Payday Budget
Are you living on a tight budget? Then, it’s important to know exactly how much you’re going to spend each month on housing. Renting? You know exactly what you’re going to pay.
When you own, you might pay nothing more than your mortgage and regular bills one month. However, the next month, a hurricane could hit the coast. This could cost you an additional $15,000 on a new roof. And as you know, your homeowners’ insurance may or may not cover that expense.
As a renter, you know, roof repairs are expenses you’ll never have to pay. Your monthly, home-related expenses, such as renter’s insurance, are much more predictable.
4. Your Rent or Lease Payments Can Skyrocket
When you renter, you do face the possibility of unpredictable rent increases each time your lease is up for renewal. This is possible unless you live in a city with rent control and your apartment is covered by it.
If you live in a nicer part of town, your rent increases can be steep. On the other hand, if you get a fixed-rate mortgage, your monthly house payments will always be the same. However, please remember the same cannot be said of property taxes and insurance. They probably will go up.
5. Home Ownership Will Make You Wealthy
This may be another myth. Of course, it’s true that you can build equity and the value in your home may greatly appreciate. However, it’s also true that a home can lose value. Lots of value.
The acceptable neighborhood you moved in could decline. A major employer can leave the area, causing a significant population decline and a surplus of housing. Additionally, there could be a residential construction boom. Any of these events may keep prices down.
As a result of these and similar situations, you might buy a house for $200,000 tomorrow and in 30 years find that it’s still worth $200,000. This means you’ve lost money due to inflation.
There are many pluses and minuses in the decision to become a homeowner. These are only a few.
More to Follow
Later, this month, we will discuss other Pros and Cons of renting and we will also discuss some major Pros and Cons of homeownership.
Palm State Mortgage thanks you for reading our blog. We hope you will return to share upcoming news in the housing market.