Buy or Rent: Which One Is Right for You?

For decades, people have been told that buying their own home is the smarter, more profitable way of living.

Today’s modern society is more mobile and fluid than ever before, meaning it’s tougher to determine whether you should buy or rent when it comes to your home.

Before you take the plunge into homeownership, check out these factors that can assist you in determining whether you want to be a renter or an owner.

How Long You Plan to Stay in the Area

If you’re a college grad who lives in Kansas with lofty goals to live in New York City, renting is probably much more likely. When deciding whether to buy or rent, consider how long you actually plan to stay where you are. It often depends on how many available rental listings are in your area, too.

For many millennials, their career could take them from one city or state to another quite easily. If you haven’t put down roots yet or don’t plan to for some time, renting is a more viable option.

If you plan to stay in one place for longer than two years, buying is a possibility. It’s much easier to break a lease and move out of your apartment than it is to sell a home you already own. Keep this in mind when deciding which one you should choose.

Credit Scores vs Tax Breaks

If you’re currently struggling with your credit score, renting might work out best. It’s a great way to build up a positive credit history as you pay your rent every month. In order to buy, your credit needs to range from good to excellent, so it’s probably better to rent for a few years until you can build your credit back up again.

For a lot of homeowners, the annual tax deduction is a real draw. This yearly deduction gives you a bigger refund at the end of the year. Many people opt to use the extra money to make renovations or pay an extra mortgage payment.

What it really boils down to is how important it is for you to build good credit or gain an annual tax benefit. It’s also tough to buy when your credit is less than stellar, whereas renting is usually much easier.

Choosing Decorative Freedom When You Buy or Rent

If you rent your place, there’s likely some serious restrictions in place when it comes to making any major changes. These restrictions can range from the paint color on the walls to growing an outdoor garden.

When you own a home, you can pretty much do whatever you want unless you’re under the rules of a Homeowner Association. This means you can paint your walls neon pink and build a gigantic deck on the front of your house if you want to.

The restriction of choice can be a turnoff for some people, so you really need to evaluate how important artistic freedom is to you. If you can hold off on painting the walls your dream color for a while, try renting until you can save enough money for a downpayment on a home.

No matter which route you go, you should still find out what types of rules are in place when it comes to making major structural changes. As for the inside? If you own your home, you’re free to do anything you want to alter the look.

The Investment Ideal

For some, buying a home is more than just a place to live, it’s a financial investment. When the market is hot, owners will happily sell their home to the highest bidder for a profit.

While you shouldn’t purchase a home solely for its resale value, it can pay you back some serious dividends if you end up living in a desirable area. This method works well for younger people who have no issues picking up stakes and moving again.

For those who aren’t as concerned about flipping their property for profit, renting works just fine. It really comes down to how you view homeownership. If you can buy something for a great price, it’s never a bad idea to sell it later and make some money back on your equity.

Repairs and Costs

If your AC unit is on the fritz and you rent, all it takes is a phone call to your landlord for someone to come out and fix it. As a renter, you don’t need to worry about shelling out cash for repairs.

When you own a home and there’s an issue, the financial onus is on you to make the repairs and renovations. Costs can range from a new roof or windows to fixing a leaky pipe or water in the basement.

When you rent, this cost is passed on to your landlord or property management company. If you’re not financially prepared to pay for large repairs yourself, renting is likely a better option.

You can also choose to buy a newer home that includes a warranty to protect you from high, unexpected costs. Always hire a home inspector before you purchase a place so they can identify any potential issues you could face later down the road.

Living Decisions

Whether it’s being free to decorate or being free of expensive repairs, there are lots of things to consider when you ponder whether to buy or rent. Sit down and take a closer look at your current financial situation and your future plans before you sign anything.

For more information about investing, buying a second home, and all things financial, check out our website.

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