What is More Beneficial – Renting or Owning a Home
The debate about whether owning a home is more advantageous than renting a home or vice versa rages on. Both have their pros and cons.
Advantages of renting a home
- Less expensive:Even if you take into account extra expenditure incurred in renting, such as security deposit, first and last month’s rent at signing and application fees, you are still better off than buying a house. Owning a house entails heavy expenses on down payment, closing costs, property taxes, home repairs and monthly mortgage instalments.
- Minimal risk:All investments are risky, and so is investing in a home. In the event of market crashing, you can be left wondering how to sell your home and get saddled with a white elephant that may not sell at the purchase value. Renting a home, on the other hand, holds minimal risk in this regard.
- Flexibility:Renting a home affords the flexibility of choosing your location and neighborhood, while in buying a house you can get stuck for good in a wrong locality or neighborhood. Furthermore, if you don’t like your rented home, you can easily break a lease and move out, whereas it is difficult to sell an owned house quickly.
- Maintenance:In renting a home, repairs are your landlord’s headache, depending upon the lease. Of course, you pay for the damages due to your negligence, but still, it is a small price to pay than maintaining your own home.
- Property taxes:For a homeowner, property taxes are a significant expense. You are insulated against these as a tenant since you are under no obligation to pay such taxes.
- Ease of budgeting:As a tenant, you know how much rent you have to pay each month. This enables you to budget your finances accordingly. A homeowner may have to face variable costs, depending upon the fluctuating mortgage costs, interest rates and even property taxes. For a tenant, the only variables are electricity and water bills.
Advantages of owning a home
- No landlord problems:You are the boss of your home. This saves you from dealing with a landlord. For tenants, an overbearing landlord can create problems at every step, making their lives miserable.
- No uncertainty:In renting a home, there is always a possibility of untimely termination of the lease agreement by the landlord. However, there is no such uncertainty if the house is yours. Also, you are saved the hassle of renewing the rent agreement and facing rent escalation every year.
- No compromise:You may cut cost in renting by compromising on the location, size and amenities. However, when you buy a house, you invariably ensure the home is perfect in every way. Such a house becomes your lifelong asset.
- Availability of finances:Although renting a home turns out cheaper than buying one, you still have to foot the realtor fees in finding a suitable home, every time you shift. For house owners, easy financing is available through home loans, and they also need to pay real estate agent fees only once for buying the house.
- Emotional security:Your very own space is bound to give you a sense of belonging and emotional security, which you cannot quite get in a rented home. For tenants, shifting to another place always remains at the back of their minds, which may leave them insecure.
- Tax benefits:Although tenants face no tax liability in renting a home, homeowners can also benefit from some attractive tax breaks on their home loan and interest repayment. In paying rent, you are merely depositing the rent amount with the landlord without getting any interest on it, which works out to be more expensive.
- Sense of accomplishment:In society, your status is judged by the houses you own. If you are a homeowner, you are deemed to have tasted success. People staying in rented accommodation do not enjoy the same kind of social status as the homeowners.
In the ultimate analysis, the pros and cons of owning a home versus renting a home cancel each other out. You can very well opt for the flexibility of renting a home or enjoy the sense of accomplishment that owning a home provides. In the end, it is your financial situation and your preference that will influence your decision.