Nobody likes the process of finding a house to rent. Finding a house to buy can be even more stressful, and for good reason. Buying a house is likely the biggest investment you will make in your lifetime, and you want to make sure it is the right one. Doing your research, asking the right questions, and choosing the right property can help you avoid some of the major pitfalls that result in choosing the wrong property. Renting or buying a home is a decision that many people face. This post gives some suggestions.
Both renting and buying come with baggage and considerations, but each of them has positive aspects to them as well. Renting is more available to lower-income individuals wgho don’t qualify for a home loan, while purchasing a home may involve a significant upfront investment. However, homeownership provides many freedoms that renting doesn’t.
Many factors are taken into consideration when purchasing a home that can affect its viability while renting is a much more straightforward process. While purchasing a home may seem a far-flung dream for many, there are many options for making it a reality. Ultimately it depends on what you are looking for from a property, and the future you want for it.
Upfront and Ongoing Costs
One advantage of renting is that the costs are pretty consistent. You have a leasing agreement with the owner of the property that dictates your monthly rent. While your utilities may vary, they can be predicted with high accuracy. Some leases even include a stipulation that the owner pays for some utilities such as garbage or water use, which can lower your monthly commitment. In contrast, homeowners are responsible for all utilities, maintenance, and related costs.
One of the most daunting aspects of buying a home is the upfront costs. Traditional mortgages require a 20% down payment, and you will likely have to pay an additional 2-5% of the value of your house in closing costs. These additional costs cover attorney fees, the cost to the title companies, and other associated expenses. Renting a home, however, will usually involve between one and three months of rent upfront, with a few administrative fees to cover credit and background checks, and other miscellaneous fees.
One aspect of renting that many find favorable is that you are not responsible for the maintenance of the property. Some leases may ask you to do basic maintenance or to care for a yard, fixing broken appliances, or problems with the property. Even routine maintenance to heating and air systems will fall under the responsibility of the landlord. As a homeowner, you are responsible for all utilities, maintenance, property taxes, and mortgage payments. Depending on your plans for your future property, however, homeownership may be the way to go.
Remodeling, Restoring, and Renovating
While being able to rely on a landlord for maintenance and even a portion of your utilities can reduce your monthly costs. This comes with limitations to your ability to customize your living space. Even simple cosmetic changes such as painting the walls may not be allowed on your lease. Anything that permanently alters an aspect of the building, such as changing the layout or adding an extension, is only to be done by the landlord.
If you purchase your home, you will have the opportunity to renovate, restore, or even remodel it. You may even need to if you buy a fixer-upper at a reduced rate. Remodeling involves making structural changes to the home. Meanwhile, the renovation is focused on the appearance and cosmetics of the interior and exterior. Restoration, on the other hand, involves making a property look the way it did during a specific period in time.
With homeownership, you are given complete control over the treatment and appearance of the property. This means that you will have the freedom to change the layout of the home, its appearance, or even restore it to its former glory. If you are interested in being able to make these types of changes, you will want to buy, rather than rent.
Buying and Renting Safely
With the scale of investment involved in buying a home, you will want to make sure that you know what you are in for. Making sure to ask comprehensive questions and knowing your upfront costs are two aspects that will be familiar from your time renting. There are more extensive concerns when buying a home. Some of which can give you added security in your investment.
When looking for security in an investment, some sellers may choose to include a home warranty in the selling process. Home warranties offer coverage for repairs to and maintenance of aspects of the home. Such as, gas and electrical systems, for a certain period of time. This can add a layer of security to the purchase of a home. Likewise, give you a period of time where you can enjoy a balance between the support of a landlord and the ownership of your property.
One portion of buying that is unavoidable for most is the application for a home loan. Mortgages are a deciding factor in buying a home for many people and offer the ability to pay off the cost of the house over many years. Even if you are denied a home loan, there are steps you can take to make yourself more attractive to lenders. Additionally, you will secure a loan for your future house.
Pros and Cons
Both renting and buying a home have positives and negatives. If you want to have full ownership over your property and the ability to renovate or remodel as you see fit, homeownership is the path for you. On the other hand, would you rather have the security of a landlord who is committed to the ongoing maintenance and care of the property? Then, you are going to be more comfortable with renting for the time being. Figuring out which option is right for you is the key to ensuring a happy, healthy home, no matter if you buy or rent.
We hope you found this blog post Renting vs. Homeownership: Which Option is Right for you? useful. Be sure to check out our post Complete Guide to Rent to Own Home Programs for more great tips!
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