Is Renting vs Owning a home worth it?
Real estate ownership is touted as an investment that is likely to build equity and a source of tax deductions. Renting also has its advantages, including little to no responsibility and flexibility. However, people often believe that buying a home, rather than renting, is a more financially sound decision.
Advantages of owning a home
- Greater privacy
- Homes typically increase in value
- Based on a fixed-rate mortgage, your costs are predictable and more stable than renting
- Enjoy tax deductions
- Build a strong credit history
- Pride in homeownership, which also closely ties you to your community
- Customize your house as you see fit
- You are your own landlord
- Create equity for the future
Cons of renting
- Unable to enjoy tax deductions
- Your rent will most likely grow from year to year
- No equity built
- More difficult and expensive to have pets
Where do you see yourself in 5 Years? Still renting?
At the end of the day, the decision to rent or buy a home is a personal on. Being a homeowner comes with a lot of responsibilities, and on the other hand a lot of benefits. GMMG can go over your finances and weigh out the options of how much you are putting back into the equity of your home or determine exactly what you'll be paying in rent and adding to someone else's equity.
While buying a home to live in shouldn’t be viewed strictly as an investment, homebuyers can capitalize on the equity (or the difference between the home’s value and what’s owed on the home) that accumulates over time. If your home value goes up, you’ll earn more when you sell.
Questions you should ask yourself to determine whether to continue to rent or buy
- How much can you afford in monthly housing costs?
- Are you prepared for a long-term investment?
- How long do you plan to stay in the home? (One rule of thumb: If it’s less than five years, you might want to rent.)
- Do you want stability or flexibility?
- Can you afford home repairs/maintenance costs?
- What are your financial, career and family goals (e.g., do you plan to relocate for work? Go back to school? Expand your family?)
- Is homeownership in the neighborhood you want to live in affordable or will you need to relocate?
Header photo by pexels-karolina-grabowska
