Buying vs. Renting

So, you are thinking about getting into the housing market. But you just aren't quite sure. Well, this is the place to consider your options! Let's talk through the life of a renter. Then we'll compare that to the life of a homeowner.

The Life of a Renter

Renting does seem a bit more carefree, doesn't it? You aren't locked in for the long term in most cases; you can move more easily and more quickly because it isn't you who has to find the new tenants. Also, you don't have to do any maintenance on your home in most cases. Perhaps you've agreed with the landlord to mow the lawn, but in most cases, any major repairs or replacements will be the responsibility of your landlord. Need a new roof? That's the landlord's responsibility. Your place should be painted? Again, it's up to the landlord.

However, you miss out on some of the benefits of homeownership when you rent. You won't be getting a tax benefit based on your rent. However, if you have a mortgage, you will get a tax benefit based on the mortgage interest you pay. And we'd all like to pay less tax, wouldn't we?

As a renter, you don't build up any equity. You are simply exchanging money for a place to live, and your benefit is the place that you call home. However, a mortgage is a kind of "forced savings plan" in that you are paying off your home even while you are living in it, and at some point you will have a valuable asset. You can't say that about renting.

Then there are the joys of rent increases. You don't have any control over that. While a homeowner can lock in a mortgage for up to 10 years, you could have a rent increase every year. So, while a homeowner can enjoy more money in pocket as their salary goes up and their payments stay the same, you'll have to check your budget and be sure that your increasing salary still pays the rent.

The Life of a Homeowner

It's not all sunshine just because you own your home. While the benefits are many, you do have some challenges. These considerations are the opposite of the benefits of renting.

First of all, you'll be responsible for maintenance of your home if you rent. However, if you don't like lawn work, you can always buy a condominium! Most condos will take care of outside work, leaving you with only the inside maintenance to worry about.

Another hassle: you will have to pay your own property taxes. You don't have this direct cost if you rent, but you have to keep in mind that normally your landlord will cover their costs with your rent. This means that you may have been paying the taxes on a property, although you didn't know it.

Any time you buy, there is the chance that something goes wrong and you could lose your home to foreclosure. While this is not the most likely thing that could happen to most of us, it is a possibility. Also, it's not as easy to move when you own. You can't just pick up and go; you'll have to sell your house as well.

However, given these points against homeownership, there are a number of really good reasons to buy. The first of these is that you are building equity in your home. As your property appreciates in value, or you pay down your mortgage, you get the benefit of that higher value. You certainly don't get that with renting.

If you own your home, you are free to decorate and renovate as you prefer. The home is yours! You don't have to get a landlord's permission to paint. When you own a home, you can put your own stamp on it. You also are not dependent on a landlord to maintain the property in any way. If something needs to be fixed, you can get it done on your time schedule.

You may be eligible for tax benefits if you own your home! Most homeowners will be able to deduct the interest costs attached to their mortgage from their tax burden. This can result in some significant savings that you only get as a homeowner.

While you may not be able to move as easily when you own, you also build a sense of community and stability. You become invested in your neighbourhood. You put down roots. While this is not a benefit that's easy to categorize, there is something special about a sense of "home".

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