Investing in a home is a big life decision. Buying a home could be the right thing for you, but so could renting. There is no right or wrong answer as everyone’s situation is unique. There are pros and cons to both options and your lifestyle and finances will ultimately dictate what you choose to do. Before you buy or rent a property there are a few things you should know. Here are a few pros and cons as well as how to make the right decision for you.
Renting Vs. Buying A House: Pros And Cons
The Pros and Cons Renting
The Pros
- Freedom to leave and move elsewhere once your lease expires
- Your landlord pays for maintenance
- There isn’t an expensive closing costs
- Fixed monthly housing expenses
- Allows you the option to experience different living spaces
The Cons
- You don’t build any equity
- You are limited with how much you can customize the space and make it your own.
- Rent increases
- The landlord could sell, stop renting and give you notice at any time
- Your sense of home stability/permanence is limited
The Pros and Cons Buying
The Pros
- You build equity over time
- You can sell your home for more than your paid for it
- You are able to customize it however you choose
- There is a strong sense of home stability/permanence
The Cons
- Closing costs are quite expensive
- You are responsible for maintenance and repairs
- It isn’t as easy for you to move
- Your home value could decrease
Rent Or Buy?
Now that you have seen the benefits and how the pros and cons are completely opposite for both, let’s take a look at how to choose the right option for you.
Decide How Long You Plan To Live In The Same Place
Have you found a place that you love or a space that you love? In more clear terms, have you found an area that you love and plan to put down roots, or have you just found a space that feels good and you would like to live in it for now? At EdmontonRealEstatePro.ca you can look at options for both buying and renting to see which suits you best. If you are sure that you will want to stay in a home for at the very least 5 years, this is considered long-term. Buying is a good option for you and makes sense.
Staying somewhere for 5 years is really difficult when you can’t add any permanent personal touches to it. Buying makes sense both financially and emotionally. However, if you aren’t sure that it’s right, or you know yourself and that you will want to move again in a year or two, renting is a better option. For example, if you or your partner’s work requires you to travel, renting is the better option.
Estimate The Cost Of Renting Vs. Buying
Depending on how long you plan on staying somewhere, renting can be cheaper than buying. The upfront costs include a down payment, closing costs, moving costs, renovations, etc, are quite costly.
Being able to afford a mortgage doesn’t mean that you can afford a home. Things add up and it can get quite expensive with additional costs.
Buying a house becomes cheaper in the long run, as it is an investment and there can be a great return on investment. After approximately 6 years, your payments as a homeowner become lower than renters. This is only if you pay fixed interest.
It is perfectly acceptable to rent for a few years and then save up to buy a house.
Is Putting Down Roots Important For You?
Look at your current lifestyle and situation. Is it likely to change or not in the next few years? If there are going to be some changes then your living conditions might need to change, too. If there is a large possibility of change, then you should hold off buying a home for now. If you are happy to move around freely, then renting is the right thing for you.
The Risks Of Renting And Buying
Renting and buying a home both come with their own set of risks. Although you can build equity, you can also lose money on a house. This could even be as a result of your neighborhood taking a bit of a dive in your local real estate market. Another risk is that you end up having to sell sooner than you thought and end up losing money this way, too.
If you are focused on other goals, settling down in a house could impede your growth and opportunities, so renting is the better option. However, renting means that you won’t get a return on the money you spend. You spend it rather than invest it as you don’t build equity when you rent.
Conclusion
There are a lot of things to consider and it ultimately comes down to what is best for you and your situation.