Buying a Home vs. RentingPosted on 17.4.2019
You’ve made the exciting decision to move to a new home. But, do you rent or buy? This is a question many people face. Depending on your current circumstance, each can have its own pros and cons. If you buy a home there is also the option of working with a new home builder. Then, you have the ability to design and build the perfect home for you and your family. Ultimately, the decision rests on several variables that should all be considered – factors that include your budget, future plans and goals, and the current real estate market.
Many young people at the beginning of their independent lives are hesitant about the upfront costs of buying a home as well as not having the flexibility that renting offers. Many people who are further in their careers and have started a family are looking for the long term stability and equity that building or buying a home can offer. On the other end of the spectrum, those who are nearing retirement are often looking for the flexibility that downsizing and renting a smaller home or condo can offer. Regardless of the big-picture factors that affect homeownership rates, deciding whether to purchase a home or rent is a very personal choice that requires careful and informed consideration.
Let’s take a look at some of the benefits and drawbacks of both buying a home and renting a home. Evaluating the pros and cons of both can help you confidently make an informed decision that will be beneficial for you and your family in the long run.
Advantages Of Buying A Home
Even after the initial upfront costs of buying a home are considered, this can be a very wise and profitable decision in the long run for many people.
Creating Equity Over Time
One of the biggest advantages of buying a home is that it can quickly become a profitable long term investment. As your home’s value increases and you pay down the mortgage, you are building equity in your home. Every dollar that goes towards your home loan’s principal is a dollar of equity earned. This also helps to improve and build your credit.
When you rent a home, you don’t have the ability or opportunity to build equity and credit since you, of course, are not the homeowner.
Buying a home versus renting can also provide significant tax benefits that are only available to homeowners. For example, Florida offers homeowners a Homestead Exemption for up to $50,000. With this, you may qualify to be exempt from a portion of the property taxes on your home. Exemptions like these can greatly help your bottom line when considering the costs of homeownership.
Like with building equity, taking advantage of tax benefits designed strictly for homeowners is not something you will get when renting a home.
More Opportunity To Make It Your Own (Especially With A Custom Home Builder)
Another big advantage of buying a home is the fact that you can truly make it your own. You don’t have a landlord to answer to or ask permission before you change things in the kitchen or update the color of the paint. You have the ability to make your living environment exactly what you picture and want. This is especially true when you work with a custom home builder, like SEDA, who can make it fun and exciting to create the perfect home for you and your family.
Long Term Stability & Belonging
When you stop to think about your long term goals for your family, especially if you are looking to settle down into a stable environment for the long haul, buying a home can be the answer for you. As a homeowner, you have the ability to put down roots in your community and develop a sense of belonging in your environment.
As a renter, there’s more chance you won’t have the opportunity to do this if you know you’ll be moving in a year or two or your long terms goals are uncertain.
Potential For Rental Income
Another source of income for you and your family could also be in actually renting out your home. Depending on your circumstances, you could look into renting out part or all of your home. Renting our part of your home or your whole home when you are away can greatly help to offset your mortgage payment, taxes, and insurance payments.
Advantages Of Renting
If you are looking for more overall flexibility and fewer upfront costs, renting may be the best choice for you.
Relocate Much Easier
The biggest advantage that many people view in renting is the flexibility it allows. If you know that you will be traveling or moving frequently and won’t be in your environment for more than a year or two, renting a home can provide the perfect answer. Relocating then becomes much quicker and far less costly than trying to sell your home. If you change jobs frequently or have to relocate often, renting will make the most sense.
Fewer Upfront Costs
When you rent a home, the upfront costs of starting that process can often be far less than buying a home. You don’t have to worry about putting aside earnest money and a down payment, paying for inspections and property taxes, or covering closing costs. To rent, usually, you only have to worry about paying your security deposit and first month’s rent payment. Even though you don’t have the long term investment that can generate more money, renting can be the answer for those who are looking to spend less initially.
Not Responsible For Maintenance & Repairs
If the AC stops working or a water pipe bursts, as a renter you don’t have to worry about getting a repair person out to the house and covering the often expensive costs. When renting, you can rely on your landlord to cover the costs of maintenance and repairs.
The Real Estate Market is Not A Factor
Many times, the fluctuations in the real estate market and housing values can cause headaches for homeowners who are trying to gain value and income from their homes in the long run. As a renter, this is something you won’t have to worry about.
To help make an informed decision on whether buying a home or renting is the best fit for you, you have to ask yourself several questions:
- Budget – What can you realistically afford and how much savings do you have available to use for this?
- Timeline – How long do you plan to stay in your new home or location?
- Movement – Do you want the flexibility to move around or stability for the long run?
- Upkeep – Do you want to be responsible for repairs/maintenance?
- Long Term Goals – What are your financial, career and family goals?
If you are looking for more of a long term strategy with stability that can help generate more income and equity for you over time, buying a home or working with a new home builder is probably the smart move. Of course, there are certain situations or life stages where renting makes better sense. This usually involves needs for more flexibility to not be locked into one place and needing fewer upfront costs.
It really comes down to taking a look at your budget and long term goals and you will have all the information you need to make an informed decision that you can rest easy on.
SEDA New Homes
Are you looking to put down roots, create a long term investment, and live in your dream home? Please talk with one of our licensed real estate agents about the options SEDA New Homes has for you. Contact us online or stop by one of the model homes in our communities today for more information.