Renting Vs Buying a home in Today’s Market the Pros and Cons

Tuesday, October 9, 2012

Renting Vs Buying a home in Today’s Market the Pros and Cons

Following the financial collapse of the mortgage markets in 2008, the industry changed completely, as well as what is considered to be common knowledge for individuals looking to own real estate. Before, there was no question between renting and buying - if you were able to own a home that was the decision to make. However, in today’s market, the focus seems to have shifted to renting, both because the restrictions on mortgages are tighter, but also because people are generally less willing to take a risk in the purchase.

Renting Pro - Flexibility

One of the biggest benefits of renting a home and not purchasing is the fact that it gives you flexibility. As soon as your lease is up, you can move wherever you want, and invest money elsewhere if you are able to get a cheap enough rent. Along those same lines, you will also have the ability to divert funds to other investments, which allow you to grow your wealth without having to commit to purchasing a home.

Renting Pro - No Upkeep

Another huge benefit of renting a home instead of owning is the fact that it is going to be on the shoulders of the landlord to pay for the basic up keeping in the home, and not your own. Landlords are required to maintain the home and keep it in a liveable condition. Many people underestimate the costs of upkeep, which can be thousands of dollars per year, especially, with an expensive repair such as a re-piping of the plumbing or fixing a septic tank. The upkeep costs of any home are going to be unpredictable, but likely costly on a yearly basis. Renters can rely on their landlord to take care of these costs, which saves them a great deal of money throughout their stay.

Renting Con - No Equity

One of the cons of house for lease property instead of purchasing it is the fact that you are never going to gain equity that many homeowners are able to use for additional investments and spare funds. When you rent, you are responsible solely for the rent, and are not earning any equity through the time in which you inhabit the home. Equity is a huge bonus for home ownership, and is one of the many reasons that people choose to purchase over rent. There are many ways in which a homeowner can utilize their equity to provide themselves with liquid funds for other investments, and raise their overall wealth.

Buying Pro - Tax Breaks

One of the huge benefits of buying a home is the huge tax breaks that are available to homeowners. Depending on where you purchase your home, the current financial situation and other circumstances, your tax breaks could be tens of thousands of dollars for making the purchase. This should be looked at as money in your own pocket, and perhaps even help to pay for the entirety of your down payment.

Buying Con - Property Tax and Other Expenses

With the purchase of your home, there are also going to be several cons as well. To start, you have to be aware of the large taxes and expenses that you will have to pay as a homeowner. Whether you opt for house for lease after purchase, or living in it yourself, you are going to have thousands of dollars in property taxes and upkeep expenses that you, as the owner, are required to handle yourself.

There are many benefits and cons to both buying a home and renting a home, and you need to make sure that you are appropriately weighing all the options in front of you to ensure that you make the right choice. Speak with a financial planner who can go over your expenses and help you to make a sound decision when you decide whether to rent or buy.

Author's Bio:

 Ori Tal is a Real Estate Developer from Cocoa Beach Florida.

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