Should I Stay or Should I Go? – The Pros of Buying vs. Renting
As the local housing market continues to flourish, you (as a first-time homebuyer or renter) may have questions about the benefits of owning a home vs. renting.
While there is an array of information available on the web, we at NextHome Modern want to provide you with a concise list of pros (and cons) of owning vs. renting your home.
Reasons to Own Your Home:
- Your house, your rules
As a homeowner, you have the freedom to decorate and redesign you home to suite your needs. While some neighborhoods may have HOA and community guidelines, you will have the free rein to have the Pinterest home of your dreams. As a renter your options are usually very limited and generic.
- Forever the same, for as long as you live… there:
With a fixed-rate mortgage, your monthly mortgage payments remain the same for the tenure of you loan. As a tenant, the cost of you rent will change with each lease term based of the market or as your landlord chooses.
- Your money works for you:
“If you’re not paying your own mortgage, you are paying someone else’s”
All your monthly mortgage payments go towards benefiting you and building equity in your home. When renting, you are making the same payments (if not more) towards your landlord’s mortgage.
- You move when you choose:
Owning a home gives you the stability of living in a city for as long as you choose. Living in a rented home, you are obligated to the decisions of others. Your landlord could choose to sell or convert their home at any point, forcing you to reevaluate and/or relocate.
- The ‘American Dream” is now the [Insert your name here] Dream:
Finding the home of your dreams and making that decision to buy it is an important milestone and one to be immensely proud of.
- Take a break, a Tax Break
As a homeowner, the IRS provides several tax breaks to make homeownership more affordable. These include common deductions (for mortgage interest, private mortgage insurance etc.) or tax credits for qualified homeowners (first-time homebuyers and homeowners who invest in energy improvements). Of course, talk with your tax professional to find out what would be most beneficial for you. As a renter however, you don’t have access to these tax benefits.
Reason for Renting:
- No Surprises Here! (maybe):
As a renter your monthly rent is predetermined, for the length of your lease. When repairs or maintenance is needed your landlord would be responsible for those repairs, eliminating those unexpected out-of-pocket costs. As a homeowner those repairs and maintenance costs would be your responsibility.
- Maybe a year here, maybe a year there:
As a renter you have the flexibility to move to a new city at the end of your lease term. When you own a home deciding to move to another place will take some extra thought and work.
- At first you pay less:
When renting, your upfront cost will be lower than needed for a home purchase. While most landlords ask for security deposit to secure your lease, buying a home may require 3 to 20% down (of the cost of the house) as well as other closing costs to facilitate the purchase.
- Protect for less:
While homeowners need to maintain a homeowner's insurance policy, the renter equivalent (renter’s insurance policy) is much cheaper and covers most of the items owned. According to the Insurance Information Institute, the average homeowner’s insurance premium in Texas (2018), was $1955/year vs. $255/year for a renter’s insurance premium.
Median Cost Breakdown:
While there are several factors to consider when deciding whether to rent or buy, (current financial status, how long you plan to live in an area, etc.) at NextHome Modern, we are here to provide the information you need and be your guide in making the next big move. Feel free to reach out with any question about the current real estate market.
Contact Danielle Ashmeade at NextHome Modern — 512.234.2487 for more information about your real estate needs.