Blog Post 31: Owning a Home vs. Renting
Blog Post 31: Owning a Home vs. Renting
The age old debate.. Owning a Home vs. Renting
There are benefits to both Owning a Home and Renting an apartment, townhome or single family home. We pride ourselves on being different than most agents. We’re not here to convince anyone that owning a home is better than renting. Our goal is to lay out the facts and help you make an informed decision considering the season of life you’re in now.
Owning a home has several benefits compared to renting:
1) Building equity: When you own a home, you build equity over time as the value of the property appreciates and you pay off your mortgage.
Flushing money down the toilet
When people say you’re flushing money down the toilet when renting this is what they mean: You’re paying someone rent and that payment doesn’t benefit you later. With paying your mortgage monthly, you’re paying down a mortgage. When you pay down a mortgage you own more equity in your home. Essentially when you go to sell, you get back your “rent” payments.
2) Tax benefits: Homeowners can take advantage of tax deductions for mortgage interest and property taxes.
3) Personal freedom: When you own a home, you have more freedom to make changes and personalize the space to your liking.
4) Investment: Owning a home is often seen as a long-term investment that can provide financial security in the future. People often say, owning real estate is like a retirement account.
On the other hand, renting has its own benefits:
1) Flexibility: Renting allows for more flexibility and freedom as you are not tied down to one property.
So if you’re in a season of life where your job could change, you have a spirit that loves change, or you see yourself settling down somewhere else, I’d wait on buying a home.
Unless, you have the ability to turn that investment into a rental when you move. It’s often smart to buy a house and live in it for a year, then when you move somewhere else you can rent that property out.
OR there’s something called “house hacking” which has many benefits as well!
2) Lower upfront costs: Renting typically requires a lower upfront cost compared to buying a home, as you do not need a large down payment or funds for closing costs.
Typically you need only first months rent and a security deposit.
First time Home buyer loan Programs
HOWEVER, there are many first time home buyer programs that offer low to no downpayment! We also have a strategy to help buyers with closing costs! So, don’t let the upfront cost be the only factor in your decision to rent instead of buy.
3) No maintenance costs: When you rent a property, the landlord is responsible for maintenance and repairs.
It’s so easy to fill out a maintenance request form and have someone show up to your apartment same day to fix what’s broken. When you own a home, the repairs can really pile up and you’ll definitely need some rainy day cash.
There is, however, protection against this:
A new home owner should always buy a Home Warranty. This will cover any of those high ticket repairs that could happen for the first year of home ownership.
There’s also this nifty app called Thumbtack. It’s a place for local individuals to offer their services and you’ll find some pretty inexpensive handymen to help you out!
It’s always going to be true that owning real estate builds wealth. Owning your home is like a forced savings mechanism through home value appreciation. Wealth building hinges on the homeowners’ ability to build home equity.
If you need further help with the debate owning a home vs renting, reach out to us! We’ll be honest about where you’re at vs. where you’re heading and can help you make an educated decision!