Buying vs. renting a house
Now and then, it is common to hear the debate on buying vs. renting a house and which of the two makes more financial sense. You will most likely hear some people argue that renting a home, only goes a long way to enriching your landlord. But, at the same time, there are financial dangers to purchasing a house when you are not ready.
While choosing whether to rent and buy, you need to consider your financial, professional, and social lives. You should only buy a property if you are confident that you will not move or want to sell for a very long time. Since purchasing your home may be one of the most significant financial decisions you ever make, you should carefully evaluate whether you are ready for it.
Here are the top advantages to owning a house over renting.
Your property will build equity over time
Your home equity is the amount that you own after taking into account the debt. When you own your property, your investment builds over time. It is especially so if your house is in an attractive neighbourhood or developing towns. Your home value may increase over time without having to do much.
You may also choose to invest in your home by making some updates that help increase your home value. Although you may have to spend on the improvements, you can improve your equity by choosing projects that have a higher return on investment. You can maintain high equity by always ensuring that you address any maintenance issues your home may have. Additionally, your equity will increase as you clear your loan balance over time.
Potential rental income
If you own your own house, you have the option to convert it into an investment property, where you can rent in for an additional source of income. You can use the amount you receive as rent to help with your mortgage, insurance, and tax.
You may opt to rent a room in your house or one unit in a duplex. You may also choose to move out to your second home completely and rent out your entire property. Either way, you have to ensure that you follow all your local rental property laws.
Freedom to customize your home
When you rent a house, you do not have the freedom to perform any home improvements. It is a right only meant for homeowners. You can choose to paint your home any color you want. If you are going to display pictures around the house, you can do so regardless of put holes on your walls.
You do not have to wait for your landlord to repair any home damages or execute any changes that you may want. As a homeowner, you can be creative with whatever changes you want for your house, a benefit denied to renters.
Future investment
The smartest financial decision you can make in your early 20s is buying a home. When you rent a house, your landlord takes all your payments, and by the start of the next month, you may not have anything to show for it. However, when you pay your mortgage, the mortgage balance decreases while there is an increase in your home equity, which creates padding for your retirement account. Therefore, it is smatter to invest in your own home rather than spending money on rent that will not provide you with value later on. Additionally, your net worth can increase when you purchase your home in locations where the trend of the market continually increases.
More control over day to day housing costs
As a homeowner, you should ensure that your long term and short financials gear towards your own goals. As you pay your mortgage, the amount that you spend to live in your property is a constant that does not change over time. It is more stable than the rent which can fluctuate now and then. Therefore, you can save more money and make better financial decisions. As a renter, you cannot make any personal decisions for your economic well-being. Your landlord makes every household decision leaving you no choice but to accept it and clear the utility bill.
Other positive perks
There are several financial benefits that you may get from owning property. One good example is that it can directly help increase your credit score. A mortgage can be a good debt only if you can meet its payments on time.
Since it proves that you are creditworthy, it opens up credit avenues for you, allowing you to get a new loan or even lowering your monthly car insurance. Such perks are some of the additional benefits you can get from deciding to join the housing market and being a shareholder. They should not be the reasons for driving you to purchase your own home.
Privacy
As a homeowner, you have the benefit of controlling your privacy since nobody can dare interrupt your space without your permission. You can decide how many guests you want and how long they can stay.
Naturally, you will have the upper hand since you can control the number of people you hence reducing noise pollution. When you rent a house, since you will be sharing the same rental space with others, you will occasionally interact with other noisy neighbors.
Additionally, you will not have any control over the number of times your landlord can access the property. They may get in and leave as they want. Homeownership can offer you priceless privacy.
Better social ties with the community
Have you ever wanted to stay in a neighborhood where you can relate very well with your neighbors? Such is the advantage of owning a home. Since you will develop roots as you live in your property, you can create stronger ties with other homeowners around your area. When you rent a property, you probably move from one location to another. It becomes challenging to develop your roots in one area and interact more with your neighbors.
You need to be considerate about the financial responsibility that comes with renting a property for buying to make more financial sense. Think about some of the things that most newbies overlook. When you rent, you have to pay several upfront fees such as a security deposit, first month’s rent, moving costs, and non-refundable deposits. You may have to pay other recurring expenses such as your monthly rent, insurance, and some additional fees that include laundry and pet upkeep charges. When you sum up the amount you spend on rent, it may be a lot more than on the one time charges of owning a property. Before you decide on whether to buy or rent a property, you should carefully consider your finances, goals, and household needs.