It may be possible to find rental accommodation at a lower cost per month than making mortgage payments. One attractive part about renting is that the landlord is responsible for the cost of maintenance and repairs to the property. In the event that the renter wants to relocate, it is easier to move since the individual does not have to sell a home first.
Disadvantages of Renting
When a person pays rent, he or she does not have the advantage of deducting mortgage interest on his or her income tax. The rental property will likely increase in value over the years but the renter does not accumulate any wealth based on this increase. The amount of rent paid will likely be increased on an annual basis.
A person renting an apartment has less living space than a person who owns a house. He or she may be restricted in what decorating changes can be made to the space, and the renter is not able to replace or upgrade features on the property. The renter must be conscious of other tenants living close by (keeping noise levels down, not walking across the floor while wearing shoes) at all times.
In a situation where the landlord is not prompt in dealing with repairs, it may be inconvenient at best or dangerous at worst to continue to occupy the rental unit until the situation can be dealt with.
Advantages of Buying
Buying a residence has been compared to a forced-savings plan. Each payment made on the mortgage pays down some principal and adds to the equity being built up in the property. The equity can be used as security for a home equity loan (for debt reduction, renovations to the property, children's college education, to pay for a wedding or trip, etc.).
A homeowner can deduct the interest paid on the mortgage on his or her income taxes. If a mortgage with a fixed interest rate has been taken out on the property, monthly housing costs remain stable for the term of the mortgage.
Pride of ownership should not be discounted as an advantage to buying as opposed to renting. The fact that the house is owned as opposed to rented makes it a home, as opposed to a temporary living arrangement. Owning real estate gives us a sense of putting down roots; it's a place that is "ours."
Homeowners can decorate their house to their own taste and make improvements to the property that they choose. If something needs to be repaired, the owner can make arrangements to have it dealt with immediately.
Disadvantages of Buying
Making mortgage payments may be more expensive than paying rent. Owing a home carries a responsibility with it to keep the property in good repair and to keep the property taxes paid and up to date. If a homeowner wants to relocate, it may take some time to sell the house in order to move. It may be expensive to make repairs and improvements to the home to present it in its best light to a potential buyer.
The decision about whether it is better to rent or buy depends on the individual's income, stage in life, and future plans. When a person is at the point where they have a stable income and are planning on staying in a particular location for the foreseeable future, buying a home makes sense.
