To Rent Or Not To Rent, That Is The Question: The Ultimate Guide to Buying or Renting A Home

The decision to buy a home can be one of the most critical decisions you make in your adult life, and needless to say, it’s a commitment that should not be taken lightly. At My Home Pathway, we believe that owning a home is the right of everyone. But how do you know when it’s the right time to buy, vs. continuing to rent?

There are many unknowns when it comes to buying a home, especially if you are a first-time home buyer. With so many variables involved in the process, it’s important to make sure you’re taking all the right things into consideration. We’re covering all you need to know when it comes to deciding whether to rent or own.

The Pros of Buying

To get started, let’s begin with the pros of buying your own home. Owning a home will allow you to grow your net worth. With a home you’ll be able to build equity. Once your home is paid off, you’ll save more money in the long-run, whereas a renter will have to keep paying rent indefinitely. Furthermore, your house can appreciate in value meaning that when you sell the house you can gain more in return from a sale than you had originally paid for the property. Both scenarios help you build your equity which you can use for further financial gains. This can also open up discounts for you on car insurance and other products simply for being a home-owner.

Another benefit to actually owning the home you live in is the ability to do with it as you please. Not only can you decorate to your heart’s desire but you can renovate as you see fit to ensure your house is catering to the needs for your family as effectively as possible. Want to change your garage into a home office? Want to add a pool or basketball court in your backyard? Not a problem. You can choose to tackle these projects however you’d like and by investing into your property in such a manner, you can also increase the value of the home overall, further benefiting you in the long run. You also don’t need to rely on anyone to make repairs in a timely fashion. You can get the work done by yourself and so you’ll never run into a situation where you may need to go without a bathroom for a few days.

There are also tax benefits you can take advantage of. You can for example deduct taxes for your payments on interest, real estate taxes, and possibly insurance. Another financial benefit to owning a home is your ability to influence your mortgage expenses. By paying more upfront in your down-payment you can reduce your rates and insurance bringing your overall cost of ownership down. Additionally as the market landscape changes over time you have the ability to refinance to your benefit.

The Pros of Renting

Of course, there are benefits to renting. A huge benefit to renting is that there are much lower up-front costs. While most places will require you to pay rent in advance (usually first and last month) as well as a security deposit, it won’t compare to the amount you’ll need to make a down payment on a house.

Renting also opens up more options because you can be a lot more flexible in the way that you rent. Renting gives you more freedom to move around as needed. If you’re offered a new job or want to check out a new city, renting will give you the option to stay there for just a few months to a few years and move elsewhere should opportunities arise with minimal stress - once the lease is up, all you need to do is pack your stuff and be on your merry way. This level of freedom can be quite liberating for some folks who like to explore different areas before committing to staying in any given city long term. It also opens up the opportunity for you to meet more people than you may have otherwise since every move will also mean new neighbors and neighborhoods.

The costs of renting are also much more predictable. The cost of your rent as agreed upon when signing your lease will be your only monthly expense. There’s no need to pay property taxes or HOA fees. You’re also not responsible for the costs involved with maintaining and repairing the property.

There’s no one size fits all answer when it comes to home ownership. As you can see, there are pros and cons to both decisions. Unlike owning a home, as a renter you won’t be able to build equity or claim tax benefits. Your rent is simply your rent. It’s just another expense that doesn’t go towards helping you build your wealth. This is especially so when home prices are on the rise. On the flipside though, if the housing market is on a downturn a renter may actually benefit because they can seek lower rent prices elsewhere, whereas a homeowner will be stuck with a fixed mortgage unless they choose to refinance.

If your dream is to own a home, we’re here to help you do that. My Home Pathway helps you improve your financial health and navigate the mortgage loan process - ensuring you get approved. Download the app today and stay up to date on our launch, coming in early 2021.