In the American dream, owning a home is often on the top of the list of many people. While this remains so, the cost of home ownership is increasing across all states each month. Currently, the states where the premium to own a home is lowest is Florida, where it costs a median of (33%) more to own than to rent, the next lowest premiums are Colorado (40%) and then Arizona by (41%). In New Jersey, the median monthly cost of home ownership nearly doubles that of renting by (93%). The most expensive places to own a home are Rhode Island, where the median home ownership cost is (84%) higher than renting, and Connecticut, where owners pay a median of (82%) more than renters each month.
The most important question here is, should I rent or buy? Does buying a house make more financial sense than renting a home? However, the decision whether to own or rent depends on ones credit score, and others is if they are starting a family.
If you are a tenant you do not have to worry about maintenance cost or repair bills to pay off, the landlord is responsible for all maintenance and repair costs of the house.
The financial benefit of renting is having access to amenities, which to homeowners is much more expensive. Whether a tenant lives in upscale or mid-scale apartments, amenities, for instance, a fitness center, in- ground pool or equipped play grounds; come at a standard charge. On the contrary, homeowners who want such amenities have to dig deeper into their pockets for the installation and maintenance costs.
When renting, you are not required to pay real estate taxes to the government. This in turn, saves you as a tenant, from incurring the hefty burden faced by homeowners. In most cases, these taxes vary from county to county as well as based on the estimate of property value of your house; the larger your property the higher the taxes.
Unlike a homeowner, while renting you don’t need a huge down payment saved to move into a rental house. The exact amount you need to move into a rental is significantly less compared to the total amount you need to purchase a house. As a tenant, all you are required of is a deposit equal to the amount of one month’s rent. On the other hand, homeowners are needed to pay a down payment for a house, which is higher.
By renting, people are avoiding potentially owing a mortgage, which is more than the property’s worth, hence citizens are scared of home owning altogether. While, mortgages and the amount of the property tax can fluctuate, when renting there is an lease agreement that the rent amount should be fixed unless landlord puts up a rent increment notice.
- By renting, at some point you have to move at the end of the lease if they move earlier renters still have to pay for the whole period regardless of the shorter period of staying in the house. Most people try to avoid such long-term commitments.
- There is limited ability to resolve issues on your own.
- Being a tenant there is no gain of equity.
- You have limited ability to customize the rented house.
- The sum of rent payments during lifetime might be equal to purchase price of a decent house.
There’s pride in owning a home, which also closely ties you to your community involvement. On the other hand, the mortgages are on a fixed rate; hence, your costs are predictable and more stable than renting.
There’s great sense of privacy when you live in the comfort of your own home, and you are in control of everything even customizing the property.
A home will increase in value and also is a kind of future investment and will also be a shelter to generations to come. The interest and the property tax portion, of the mortgage payment is a tax deduction.
Equity is the portion of the house that the owner has already paid off, so with each loan payment, your home equity would grow and give you more borrowing and purchasing power. Also home equity gives the chance to borrow more money with a second mortgage in the form of a home equity loan the loans can be used for education or home improvements.
Owing a home is an investment, a house appreciates over time, and national median home price goes up each year. As you pay mortgages the debt goes down as the value of your home increase. There is gain in stability, reduces financial and emotional burden and increases sustainability.
- Home ownership gives a strain on finances, you can pay more for housing during the first several years as a buyer than when you rented.
- The repair and maintenance cost of the house is entirely on your own means and the bills are high, especially when u put up amenities.
- There is decreased mobility, you cannot just decide to move unless you sell your house, being a home owner tires you down in one place unlike one who rents.
- Owing a home requires commitment.
- It generally requires a larger initial investment- the down payment.
The benefits of
buying, when able to, far outweigh those of renting, even if owning a house involves commitment to that house. Hence, one of the biggest decisions people come to is the issue of renting versus buying though it is an extremely tough decision making choosing either of them.
Owning a home gives one a sense of security and pride, happiness, comfort and reduces on a lot of costs and one can start on saving, but after a while you find you do not love owning a home, you can always sell it and start on renting once again.
The most import factor to consider when making this decision is not let the intimidation factor of the home buying long process, a lot of paper work, time-consuming making it feel like a second job scare you from your American dream of home ownership.