Renting Vs. Buying Your First Home: Pros and Cons
Over the years, many people have been promoting the benefits of buying a home. However, it might sound strange to know that doing so also has disadvantages.
At the same time, renting your first home comes with pros and cons. For that reason, some people do not know if they should rent a house or buy it.
Choosing to rent or buy a home is a crucial decision that will affect your goals, financial health, and lifestyle.
Although both require effort and include different responsibilities, the Liberty Real Estate team says your choice should depend on your lifestyle and financial freedom. Homeownership is not always a better option.
At the same time, renting is not as easy as it appears. It is advisable to rent a home if you want financial independence.
This article will discuss the pros and cons of renting versus buying your first home.
Pros of homeownership
1. Stability for your family
Buying a home provides some stability for your family. You are sure that no one will forcefully evict you from the property. As a result, you can make long-term plans for your home and neighborhood.
2. Ability to customize your living space
As a homeowner, you have the liberty to make long-lasting and personal changes to the property. You can decorate it to suit your lifestyle and goal. Some long-term goals can include modifying the property to accommodate aging-in-place.
3. It is a long-term investment
Homeownership is a long-term investment. Over time, your home’s value can appreciate excessively. You can earn more returns on your investment if you decide to sell it in the future.
4. Predictable monthly payments
You know how much you will spend on the mortgage. The mortgage payment is the same, and there is no surprising increment. You will also know when to pay off the mortgage and enjoy complete ownership.
5. Opportunity to build equity
You can build equity in several ways. You acquire it as you are repaying your mortgage or when you improve the function and aesthetics of the home. You will also build equity as the house gains value over time.
6. More control and privacy
Homeowners have control of what happens on the property. They decide if they should welcome anyone into their property. That way, they enjoy their privacy.
Cons of homeownership
1. The upfront cost is high
The upfront cost of buying a home is high. Some may require an initial deposit of at least 20% as the down payment. You need to also budget for the closing costs that come with home buying.
2. Maintenance costs
The home will require repairs and replacement if you intend to keep it in good shape. Wears and tears will occur in the house. If you do not invest in regular maintenance, the home can become unfit for habitation. These home maintenance costs can be expensive.
3. Numerous expenses
Many predictable and unpredictable costs accompany homeownership. These include home insurance, property taxes, pest control, pool cleaning, tree trimming, emergency repairs, etc. All these may cost you thousands of dollars.
4. Loss of value
Homes lose value due to several reasons such as declining neighborhoods, structural damages, outdated design, poor maintenance, etc.
5. Less freedom and mobility
Even when you no longer like the neighborhood, you cannot pack your things and relocate. You cannot move the home to a new location of your choice.
Pros of renting your first home
1. Flexibility and mobility
You have enough freedom to decide where and how long you want to stay in a particular environment. You can move any time you want.
2. Inexpensive monthly payments
Monthly rents are inexpensive if you compare them to monthly mortgage payments. However, some markets can make buying a house appear cheaper than renting.
3. Low upfront costs
Renting a property does not require any upfront cost. All you need is the security deposit and monthly or weekly rent.
4. No maintenance costs
Renters are not responsible for the home’s maintenance. Landlords handle maintenance.
5. Predictable expenses
As a renter, you can predict your expenses because you know how much to spend on the lease at a given time.
Cons of renting a home
1. No future benefits
You cannot boost your credit score as a renter. Also, your rent does not offer any equity on the property. Even when the home’s value appreciates, you do not benefit from it.
2. You can not personalize it
Landlords do not allow tenants to remodel their houses unless with written permission.
3. Less control over the home
The landlord may decide to sell the property and force you to move out.
4. Rents can increase
Even when you are sure of your rent, your landlord can raise it above what you can afford.
The bottom line
The best option between buying and renting your first home depends on your plans and current circumstances. After considering the above pros and cons, you can make the best choice. Your real estate professional can also handle additional inquiries.
