Is buying a home always the best idea? Some individuals’ circumstances are such that renting is a better choice for them. There are pros and cons to consider when deciding to buy or rent a home.
Flexibility: Advantage Renting
While owning a home can be a good investment, it takes time to see an increase in value. For individuals who need flexibility, it is much easier to move from a rental property than to sell a home. Even with a signed rental agreement, most have provisions for breaking the lease under certain conditions, such as job relocation or divorce. It can often take months to sell a home.
Financial Upheaval: Advantage Renting
For someone who has gone through a difficult financial situation, such as a bankruptcy, divorce, or unemployment, it may be easier to rent a home instead of obtaining a mortgage. While some landlords check credit ratings, they tend to be more flexible when it comes to a person’s past financial difficulties, especially if that person has a good history of paying rent on time. On the other hand, those same situations can prohibit potential home owners from obtaining a home loan.
Convenience: Advantage Renting
Renters are free from some of the responsibilities that come with owning a home, which may be beneficial for people with busy work schedules or health issues that would make them unable to deal with home maintenance. Warren said, “Ownership obligates one to the expense of maintenance, repairs and replacement of building components and grounds from time to time, as well as taxes and property insurance. In most cases, people who rent homes will be responsible for basic maintenance of the grounds, but not responsible for maintenance, repair or replacement of the components of the home or grounds. When the furnace goes out or the fence falls down, the property owner is responsible for repair or replacement, not the renter.”
Upfront Costs: Draw
While renters often have to pay a security deposit, and sometimes both first and last month’s rents, before they move in, prospective home owners have considerable costs before they can move into a home, too. These costs include paying for home inspections, appraisals, closing costs, and the down payment. Mortgage lenders also require homeowners to purchase home insurance, which is often paid along with the monthly mortgage payment, with the entire year usually paid up front. Renters are not always required to purchase renter’s insurance, though it is a good idea to protect your personal property and yourself from any liability.
Monthly Costs: Most likely advantage to renting
While a monthly mortgage payment could be similar to paying rent, homeowners also have to account for the cost of maintaining the property and the addition of any amenities, such as a pool, patio, deck, etc.