We have many discussions with first time home-buyers as they consider the move to home ownership mostly surrounding whether they should buy a home or continue renting. Conventional wisdom has always said it is better to own your home than rent it, but why? In this article we explore the pros and cons of each and discuss the issues you’ll want to consider when deciding whether or not buying a home is a good fit for you.
Usually your overall responsibility with the property is lower when renting. General maintenance items as well as major fixes on the landlord. You are usually just asked not to damage the property and pay your rent on time.
It’s a short-term obligation. Most leases are 12 months which means if you decide to move then you can usually do so with relative ease provided you do so when your current lease is up or your landlord agrees to let you out of it.
Your monthly payment is usually less than what a mortgage might be.
Lower utility costs. Many apartment units are smaller than what you might buy and therefore should cost less to heat or provide electricity for.
You cannot usually make alterations to the unit you are renting.
Depending upon what type of building you live in you may have to deal with other tenants. This may be problematic for you if the other tenants aren't respectful or noisy etc.
Nothing to show for having paid rent for years.
Subject to rental increases or eviction. Eventually your landlord will raise the rent on you to keep up with his or her expenses or they may even decide to sell the building to someone who will. There is a large amount of uncertainly when renting.
Tax benefits. In most cases you’ll be able to deduct your mortgage interest and property taxes from what you owe the federal government in April. This will help bring down your average monthly cost of ownership and may even get you close to what you’d pay for rent on a similar home.
Equity build-up. Even with the market having trouble over the last number of years you’ll still own your home outright at some point. Which means eventually you’ll have no mortgage payment on it at all.
Privacy. Generally you have much more privacy when you own a home. At the very least you’ll not have a landlord wanting to come over and inspect the apartment.
Increase in market value. Over the long-term your home will most likely be worth more than what you paid for it. Certainly there are market swings but if you own your home for a long time it will increase in market value.
Since you own your home, you are typically free to make modifications or improvements to it at will. Note: in cases where you want to do large modifications you may need to get a permit and approval from your town.
It’s your responsibility to maintain the property and fix any issues that arise.
Utility costs may be higher as the square footage increases from renting to owning.
Liability. When you own a home you are now responsible for others’ safety while they visit. If someone gets hurts at your property you may be liable for compensating them for their injuries or damage to their personal property.
Long- term commitment. If you need to move or get a job transfer owning a home may make it more difficult to just pick up and leave since you’ll have to deal with selling or renting your current home, which can take several months.
As you can see there are many things to consider when deciding whether or not to buy a home, and there are far more not mentioned here. I believe that in most cases people desire to own their own home and take pride in doing so.