Is Owning A Home Necessary?
With the decrease in interest rates, many people are thinking about owning a home instead of continuing to rent. However, home prices are increasing quickly, so a decision may need to be made as soon as possible. Before buying, it’s important to think about the pros and cons of owning and whether it might be better to rent a home instead of owning one.
Con: Hard to Move in a Hurry
Those who own a home will find it’s not easy to move in a hurry. Renters may need to pay a little extra to break a lease, but it is possible to move at any time and with little notice. When selling a house, it’s necessary to prepare the home, list it, then find the right buyer. Once a buyer is found, it’s still a few months before the closing. It is possible, though expensive, to go ahead and move while the home is being sold, but moving from a rental will always be faster.
Pro: More Predictable Expenses
Owning a home does mean more predictable expenses each month. Homeowners who have a fixed-rate mortgage will know what their mortgage payments will be each month. Variable-rate mortgages can adjust, so they’re not as predictable, but fixed-rate mortgages are more common today. Renters have a set payment for the duration of the lease, but it is possible for the rent to increase at the end of the lease. Right now, rental costs are increasing quickly at the end of each lease term, so it can be hard to predict what the rent payments will be in the future.
Con: Maintenance Can be Expensive
Homeowners will find that there is quite a bit of maintenance that needs to be done to keep the home in good shape. At times, there may be major repairs needed, which can cost hundreds or thousands of dollars to deal with. A new roof, for instance, maybe needed and can cost thousands of dollars when it’s done. Renters don’t have to worry about this as much, as the landlord will handle any repairs that need to be made. When someone owns a home, however, they’ll want a maintenance checklist to help them remember the basic tasks that should be done to help prevent damage or the need for repairs.
Pro: No Worry About a Landlord
Homeowners don’t have to worry about a landlord restricting what can be done in or to the home. While renters likely cannot hang things on the walls or have pets without paying an extra deposit, homeowners can do anything they wish. Homeowners can do major renovations, have any pets they might want, paint the interior or exterior, and a lot more. Renters will need to follow the lease and ask permission before doing anything to the home. If renters do not ask permission, they could be evicted or have to pay for any repairs needed to restore the home when they move out.
Con: Can be More Expensive to Own
Overall, it can be more expensive to own a home instead of rent. On top of the potential for mortgage payments to be higher than rent payments, there is the concern about major repairs that might be needed, regular maintenance to keep the home in good shape, insurance, and tax payments, and a lot more. Renters don’t have to worry about any of these costs, as they’re built into the rent payment made each month. The rent payment will cover everything needed to manage the home, based on what the landlord currently pays for these types of expenses.
How to Make a Decision
Making a decision to own or rent can be difficult. It’s important for anyone considering their options to think about the following before making a decision.
- Monthly Expenses – Take some time to think about the monthly expenses for both renting and owning to see how they compare. These are traditional expenses like mortgage or rent, water, electricity, internet, and other bills, not repairs or maintenance that may be needed.
- Building Equity – If building equity is important, owning is the better option. However, if this is not a concern, both renting and owning can be a good option, depending on other details.
- Maintenance and Repairs – Maintenance and repairs are handled by the homeowner, so this is something to consider before buying. If someone is handy around the house, they may be able to save on maintenance and repairs, making owning a home a little bit less expensive. Those who don’t want to have to worry about this, on the other hand, may want to rent.
- Moving in the Future – Consider how long it may be until it’s time to move. Those who plan to move in five years or less are better off renting. Those who plan to stay in the area for many years, however, may prefer the stability of owning a home.
- Desire to Own – While owning a home is a dream for many, it’s not the right option for everyone. Those who don’t want to deal with maintenance, who want to be free to move as they wish, or who don’t want to own for other personal reasons may want to consider renting, instead.
- Location – It’s possible to rent or own a home in just about any area, but if someone has something specific they’re looking for, they may find it easier to own instead of rent. Someone looking to live near a school, for instance, may find there aren’t as many rentals in the area and might want to think about owning, instead.
Both renting and owning a home can be a good option, but it depends on the person, their finances, their desires, and more. Those thinking about whether to own or rent will want to compare the pros and cons carefully to make the right decision for their needs. If someone does own a home now and would like to consider selling, speaking with a professional about the options is a good idea.