Is it better to rent or buy a home? This is a common question. Many people will ask themselves this question multiple times throughout their lives. The answer to this question varies from person to person. The answer to this question varies from situation to situation. Both renting and buying can be good options. They both also have cons as well.
Home Purchase Variables
The biggest question to ask yourself when deciding if renting or buying a home is the best option is to ask yourself what is your end goal. Are you still moving around quite frequently? Do you have a family? Are you ready for a big investment? Can you financially afford the maintenance that comes along with buying and owning a home?
Can you finance and afford a down payment on a house? How is your credit? Are you looking for a home for personal reasons or are you looking for a home for investment reasons? Depending on how you answer these questions this will determine if renting or buying is the best option for you.
Renting A Home
More than a third of the U.S. population rent their homes. According to Pew Research Center, 36.6% of households are renting. Renting is a way many people live for several years of their life and more people are starting to rent. The renting level has not been this high since the 1960s. Forty three million people lived in rented housing in 2019.
Renting is a good option if you’re not ready to make a commitment to finance a home. It’s a more logical choice if you move around frequently. Renting is a good option if you do not have the financial means to afford and maintain a house. If you’re credit is not the best, renting may be a more feasible option for a person while they improve their credit. Renting does have its cons.
Renting does not build wealth or equity. As a renter, you will not own the place you are paying for. A failure to pay rent can easily cause an eviction. According to Eviction Lab, 2.3 percent of renters have been evicted. Though this number is small, evictions are a possible downside to renting.
To Rent Or Buy A Home?
Just like with renting there are pros and cons to purchasing your own home. The biggest pros to buying a house is that you’re the owner, its an asset and it typically provides more stability. Buying a house does require you to be responsible for property taxes,homeowners insurance and repairs.
One of the downsides to purchasing a home is the possibility of foreclosure. If you finance a home, and the failure to maintain payments happens, then the lender will have a right to foreclose on the property. Foreclosure stains your credit for several years and makes it harder for you to finance a property in the near future. As of February 2020, over twenty seven thousand properties were in the foreclosure process.
In the grand scheme of owning versus renting owning always makes more sense than to rent. In the U.S. sixty five percent of households are owned. However, this does not mean you should immediately run out and make a home purchase. Your ultimate goal should be to eventually purchase a home as there are many benefits to home ownership.
Buying A Home Can Be More Affordable
According to Property Management’s website, buying is the affordable option in sixty four percent of markets throughout the U.S.. Your own home will allow you to create and build equity. Not only can it be the best investment of your life. Your home can be passed down to future generations. This makes the question to rent or buy a little easier to answer.
Purchasing any type of property is a major life commitment and accomplishment. Because home ownership is a long term investment, think long and hard about the type of property that will fit your current and long term lifestyle.
Are you planning to have or expand your family? What are the school systems like in the neighborhood? Could you still afford the montage payments if your income was to change? These are questions you should ask yourself before making the commitment of buying a house.
Conclusion
Whatever you plan to do. When deciding to rent or buy a home, be sure you you go over it a few times. Especially when buying, which is usually a long term financial commitment.
Mostly, make sure you know what your goal is and make sure that buying a house will aid you in accomplishing your goal.The timeline of when a person should make a home purchase comes down to where they are currently in life and what is their end goal.
