Rent or Own?

The choice of own vs rent a home is one of the biggest financial decisions that most adults make. This is because both of them have advantages and disadvantages, based on a person's specific circumstances. It is easy to debate the various benefits of buying a house, especially because homes normally appreciate in value. However, after the housing crisis, buyers have become more cautious, and they are debating which option is better for them. The following are some of the circumstances that would make it good to buy a house, as well as circumstances that would make it advisable to rent a home.


When is it advisable to rent a home?


1. You live in a city and are working a job that you do not particularly love. You are actively hunting for a job all over the country. If you are facing career uncertainty, then it is advisable for you to rent your home. Buying a home will tie you to your current location, and this is definitely something that you do not want.


2. If you are a very flexible kind of person who is always moving around and traveling from one corner of the world to another, buying may not be financially advisable. If you are also unsure about a neighborhood, or you want to explore various areas before you settle down, you will need a flexible living situation. In this case, renting is definitely better than buying.


3. The mathematics of buying a house can be tricky. You will need to commit to paying mortgage payments for quite some time in order to avert repossession. If your income is uncertain and you may get a pay cut in the future, you should pause first before buying a house. In this scenario, it is much better to rent a home until your source of income is more solid.


4. If you have a bad credit score, you may not qualify for a mortgage loan. Even if you do get a mortgage, the interest rate will be extremely high. Instead of buying a home, you can try and improve your credit score by renting a place and paying the rent on time. This is a much better decision in the short term.


5. If you do not have the money to handle maintenance costs, then you should consider renting. When you own a home, you are the lucky person responsible for all the roof leaks and plumbing issues. This can be costly in the long run. If you would like to avoid this expenses, then renting is a better option.


However, there is a downside to renting. One of the biggest disadvantages is that the rent may fluctuate a lot during your entire renting period. This will significantly affect your long term budget, as rent is a very big-budget item.


When is it advisable to buy a home?


1. When you want to build equity in the home that you live in: This is one of the biggest advantages of buying a home. In both owning and renting, you will need to make monthly payments. The difference is that when you buy a home, the monthly payments build your equity. This means that every monthly payment increases your stake in the home. Later, if you want money, you can borrow a loan against this equity. In case the interest rates drop, you can refinance your home and getter better interest rates. Most experts suggest that if you intend to live in a house for at least seven years, buying it is better than renting because of the increased equity.


2. Uncle Sam will smile more at you if you are a buyer. If you want a few tax credits, then buying a home is the best option. This is because property taxes and interest rates on mortgages are tax deductible. Therefore, you will be able to save quite an amount by the time you are done with the mortgage payments.


3. When you buy a home, you are not answerable to anyone else. You can hammer away and add the wall hangings, spruce up your bedroom and kitchen, and repaint the bathroom to your favorite color. You are not accountable to a landlord for the decisions that you make. If this kind of freedom is enticing to you, then you should definitely buy a home.


4. When you take out a mortgage that has a fixed interest, the monthly payments will be fixed. This will help you to budget your finances in the long run. However, with a rented house, the rent can fluctuate and disorganize your finances. This is because the landlord can easily increase the rent after every few years.


Conclusion


The debate of which is better between to own vs rent is solely based on your circumstances, your needs, and your station in life. For those who want to establish roots in a place and to live there for a long time, buying is better. However, for the flexible individuals who could move halfway across the country at any time due to their career, education, or any other factor, renting is probably the better option.