Should I buy or should I rent? It’s an interesting question and I can tell you right now that there’s no right or wrong answer as it depends on each individual and your circumstances. Several years ago I would have recommended that you rented a home for the time-being while the real estate market was getting back on its feet.
Financing was a lot more difficult then as the banks became very cautious as to how much they lent and who they lent it to, but now is a different time; the market is definitely picking up right across the country. So what’s my advice? Read on to find out.
Buying a Home: The Pros and Cons
It is many people’s dream, to be a homeowner, but home ownership does not come without its burdens and it’s not for everyone. On the plus side, owning a home is something to be very proud of. It is your sanctuary and you can make changes to the home depending on your personal taste, do renovations, paint, choose decorative items and furniture all to personalize your living spaces, both inside and out.
Then there’s the financial benefits: when you make improvements to your home you are potentially increasing the value of it, and as you pay down your mortgage you are building equity in the home which in turn builds your personal wealth. When you build equity you can use that money further down the line to finance other improvements to the home, or to pay for something important, and any equity remaining over and above what you owe your mortgage lender becomes yours once you sell the home. This personal wealth can then be used to make a larger down payment on your next home and hence this is how you would move up the property ladder.
There are other financial benefits to home ownership as well. For example, you may qualify for certain tax benefits and grants that can help you to improve the home such as its energy efficiency.
But what about the drawbacks of home ownership? The financial responsibilities can be a burden. Paying your mortgage is just one thing you’ll be paying out regularly, but you need to also factor in property taxes, utilities, insurance and maintenance. You will be the only one responsible for maintaining your home and if you let the home deteriorate its value will drop.
Renting a Home: The Pros and Cons
When there are so many advantages to home ownership you may wonder why you ever rented, but, as I said above, home ownership is not for everyone. Though there are assistance programs like FHA-backed loans for homebuyers with a lower credit score, you may prefer to wait to buy a home until you’ve built up a better credit history and you’ve saved a larger amount for a down payment.
Renting can be a good way of assessing the housing market, especially if it’s going through changes. Sitting it out while prices drop may get you a better deal a few months down the line, though equally, waiting it out while the market is rising could mean you miss out on homes that rise above your price range.
Renting is an easier option if you like to move as it gives you greater flexibility, and you’re not hit with unexpected repair bills as these are covered by the landlord. However, all the while you rent you are paying down your landlord’s mortgage, not your own. You are not building equity, and you are not as free to make changes and personalize the home as you could if it were your own.
Looking at how the real estate market has picked up again, my advice would be to buy now before prices get too high. In a rising market you know that investing in real estate should be a secure and wise investment, provided that the time is right for you, financially speaking.