When you are looking at relocating, it’s important to ask the question, Is it better to rent or buy? Throughout your life, you’ll definitely ask yourself this question at least once, if not multiple times. There are many factors that must be considered when choosing whether to rent or buy; these include a person’s lifestyle, financial situation, relational situation, and employment.
Let’s first look at the pro’s of renting:
1 – Easy to Move: When you rent, you’re free to move as soon as your lease is up. If you’re unsure of how long you’d like to stay in a particular area, renting is usually the best option. It makes the most sense to buy a home when you are sure that you want to stay in the area of at least a few years.
2 – No Property Taxes: Property taxes, mortgage payments and home owner’s insurance are all fees that you do not have to pay when you rent a home.
3 – No Maintenance: Every home will need maintenance and repairs eventually. When you rent a home, these repairs and the corresponding cost, are handled by the landlord or property management company.
Now, let’s take a look at the con’s of renting:
1 – Increasing Rents: Rents all over the nation are on the rise, and fast. These rental increases make it hard to plan your future finances when you can’t be 100% sure what your rent payments will be after your current lease expires.
2 – Lease Deadline: Many leases are structured for a one-year period. Once the lease is up, there is no certainty that you will be able to renew. The future is always uncertain when you rent a home.
3 – No Equity: Knowing that every rent payment goes straight to the landlord, leaving the tenants with zero ownership or equity is often the hardest part of renting. Rent always cost must more in the long run.
Homeownership has it’s own list of pro’s and con’s. We’ll look first at the pro’s of home buying:
1 – You Can Make it Your Own: When you buy a home, you are free to paint, change fixtures, tear down walls, or put up new walls. It’s your home and you can customize it to fit your personality, needs, and design choices.
2 – No Payment Hikes: The majority of home loans and mortgages come with a fixed rate, meaning that your mortgage amount will not increase over the life of the loan. This security brings comfort and allows you to make future financial decisions.
3 – Build Equity: You earn equity in your home every time you make a payment. If you buy in an area that appreciates well, you can use your equity to move into a larger home, refinance and use the money for other needs, or leave it alone and watch it grow over the years.
There are con’s to homebuying as well. Here is a quick look at a few of those:
1 – No Money for a Down Payment: When you buy a home, you’ll be required to put a certain amount of money as a down payment. This is generally 3% to 5% of the cost of the home; and while many believe you need to put 20% down, this is not usually the case.
2 – The Cost of Selling: Selling a home is not free. Realtor fees run from 4% to 6% of the sales price and if your home needs maintenance or repairs, you’ll have to come up with that money prior to selling. Selling a home also requires months of planning and preparation.
3 – Homeowner Responsibilities: When you own a home, it is your responsibility to maintain the property. Landscaping, maintenance, property damages and other repairs will all fall to you.
So what’s the verdict between renting and buying? Deciding which is the the right option means you must take the time to look at all the aspects and decide what is best for you. If you do plan on buying a home, there is a ton of information online to help you in the process. Start with this article, written by a fellow Phoenix real estate agent, about getting started in your house hunt.
Whether you plan on buying or renting, I hope you find the perfect place to call home. Good luck and happy house hunting!