Renting vs Buying. Which is better?
The question of renting vs. buying continues to stay on many people’s minds, well beyond that initial time of moving out of your parents’ house. Do you rent, or do you buy? Which is truly the better option? This answer varies for everyone. Often, your decision is all dependent on your lifestyle, desired living location, financial means, and plans for the future.
Consider The Pros and Cons of Renting vs. Buying
There are a few major pros and cons of each that you should consider.
Some pros of buying a house include:
- Ownership – You own the home and can do with it what you wish. Paint colors, wall hangings, and even curtains are yours to decide, while renters do not have that luxury.
- Home Value – Your home may increase in value, particularly if you make ideal changes for the current market trends.
- Stability – Renters are more likely to move than those who own their home. You have better long-term stability.
While some cons of buying include:
- More Responsibility – You have to handle your own repairs and maintenance.
- Property Taxes and Fees – You have to pay property taxes and other regular fees.
- Utilities – You have to pay all utilities yourself. Many renters have at least one utility covered by their landlord. Many apartment dwellers do not pay for trash, for example.
The pros of renting are:
- Limited Responsibility – You do not have to handle your own repairs. The landlord sends someone to handle it.
- Ability to Quickly Relocate – You can finish your lease and relocate anywhere you desire. You can even break your lease and pay the difference so that you can move quickly if necessary.
- No Additional Fees – You don’t have to pay additional fees, like an unexpected cost if your dishwasher stops working, or property taxes by a certain time. The landlord handles them, not you.
Some cons of renting are:
- Less Privacy – You often share hallways or common rooms with others. You may have the landlord coming in at inconvenient times.
- No Ownership – You are paying to rent the space owned by another person. You do not own anything and do not benefit from improvements.
- Annual Rent Hikes – You may have the same price to pay for an entire year, but that price often gets hiked by the time your lease is up. You may have to pay a higher amount each year to continue to live there.
In Renting vs. Buying, Think About Overall Pricing and Closing Costs
Buying a home is much more expensive than renting in the beginning. Most landlords want you to pay the first month’s rent and a matching security deposit to move in, and that is all you will have to fork over by the time you get your keys.
On the other hand, buying a home has many more expenses. You not only have to pay a down payment toward your mortgage, but you also have to handle some appraisal fees and other charges before you receive the keys. You may also have some additional closing costs in the final push to have the home become yours.
Interest rates are another cost to consider. As a renter, you don’t have about interest. As a homeowner, a high interest rate on your mortgage could mean a much heftier payment than you initially hoped for. You need to check in with different lenders and find an interest rate you’re willing and able to pay.
Does Inventory Make a Difference?
Inventory makes a major difference in your decision. If homes are empty in your area and you can buy a place for relatively cheap, you may be more likely to purchase. If rental units are vacant and you can get in quickly, this may be the better option. The number of houses on the market or rentals available at the current time will help dictate your decision. For example, if you are currently looking to buy in one of the hottest markets, it may take you much longer than usual to find a place since people are clamoring over them.
What About Insurance?
You pay a much lower renter’s insurance price than you pay for homeowner’s insurance. If you don’t want to take on such a high monthly expense, simply renting a home or apartment and handing over a few dollars each month might be better. The average cost of annual homeowner’s insurance is $1,383, which equates to more than $115 per month.
Your Moving Timeline for Renting vs. Buying
The timeline you need to move also plays a significant part in your decision of renting vs. buying. If you need to get out asap, then finding a rental may be best for the time being. If an apartment complex has vacancies, the entire process can be quite quick, from applying to moving. On the other hand, buying a home is a much longer process. It takes several months, at the very least, from pre-approval to actually closing on your home and getting the keys. In a tough market, it could take even longer.
You can only answer the question of renting vs. buying. You need to select the choice that makes the most sense for you at the current time. You can always reevaluate down the line. If you require additional guidance or have decided to buy already, contact Offercity to discuss your options.