Should you rent or should you own?
A home purchase is a major life decision that should never be taken lightly, and while it makes sense for some people, that may not be the case for others. If you aren’t keen on the responsibility of owning a home, then renting is for you.
There are strong arguments for either option.
The benefits of buying
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You build equity
Instead of paying rent, you can use the money to pay off the mortgage in a home you’ll buy. Doing so increases your equity or financial stake in your home. You can use your equity for many purposes because it is considered an asset – fund your kids’ college education, remodel your home or buy a second one, and add to your retirement.
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Your home may appreciate over time
If you choose to sell your home later on, you could end up making a tidy profit.
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Tax credits can offset home ownership costs
The government offers home owners tax deductions that help them reduce their tax bills and encourage them to buy a home.
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You can do what you want with your property
As long as you comply with building codes, upgrades, additions, and renovations to your home won’t be an issue.
The benefits of renting
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You don’t have to worry about the property losing value
When values decline on a rental property, it has no financial bearing on you.
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The property owner takes care of repairs and maintenance
Most of the time, and depending on the agreement, the property owner is responsible for the upkeep.
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You can move and relocate whenever you want
Save for your release documents, you don’t have to worry about any other paperwork when you decide to end your rental agreement. You also don’t have to worry about what will happen to your property when you leave.
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You can ”test” the neighborhood
Since renting permits you to stay at one location for a period of time, you get a feel for the community. If you like the neighborhood, you may eventually want to buy a home there.
Ask yourself key questions
Now that you know the advantages of renting and owning, it’s time to answer a few questions that will provide you a clearer picture of the option that’s best for you.
Do you have money for a down payment?
Generally, you need to have a down payment that’s 20 % of the total cost of the property if you want to keep making your payments. If you can’t or aren’t able to come up with that amount, you can’t own a home just yet.
Can you afford the monthly mortgage payments?
Twenty-five years is the standard length of time to pay off a mortgage. Any longer than that, and you could end up paying a lot more than your home is worth. Ideally, your monthly payments shouldn’t exceed 30 % of your monthly salary. If your income won’t allow you to pay off your loan within 25 years, it may be wise for you to delay buying a home.
Deciding whether to buy or rent isn’t an easy choice. When it’s time for you to look for the perfect home in Greater Cleveland, Ohio contact Cici Riley at 216-831-9310 or send an email to ciciriley(at)howardhanna(dotted)com.