Renting Vs Buying A Home

Renting Vs Buying A Home

Since the beginning of time (or to it seems) people have been asking themselves whether they should buy or rent real estate. The answer? Well, it depends. As with anything in life, there are pros and cons to both and it’s up to you to decide which option outweighs the other. But, fear not, we can shed some light. Here are a few things to consider when deciding if owning or renting a home is the better fit for you:

Why Rent?
For starters, the freedom. There is no long-term commitment involved in renting like there is in homeownership. Don’t like the neighborhood? No problem, just rent somewhere else when your lease ends. Renting gives you time to research and discover an area before locking yourself in long-term. 

Renting also easier at times for the simple fact that you don’t own the place. If something in your rental home breaks, you don’t have to be the person to fix it OR pay for it! Simply pick up the phone and call the landlord.

Renting can boost your credit score. Paying rent on time helps build up the credit you need to qualify for a mortgage.

If you foresee a job change or transfer in the near future, you may also want to seriously consider holding off on that home purchase. In addition, if you see there may be a pay cut coming your way, you’re probably better off renting for now. Instances such as these can potentially hinder your ability to borrow money and ultimately make mortgage payments. 

Why Buy?
Put simply, equity. When you pay a landlord rent, you add equity to their bank account. When you pay your home mortgage, you increase your degree of homeownership. If you plan to stay put for at least five years, the cost of purchasing a home is typically offset by built-up equity and the increased value on your home. If your home equity grows to a ratio greater than 20:80, you are able to borrow against your equity. This can then be used for other major purchases such as a vacation home or your kid’s college education. 

Also, if interest rates were to drop while you owned a home, you could refinance your mortgage to help pay it off in a shorter amount of time. Tax wise, a first-time homebuyer’s tax deduction can subsidize a pretty hefty portion of the expenses they’ve put into their new home. A thirty year mortgage also comes with a repayment schedule, where the highest payments are made in the beginning years. This means that mortgage holders are able to claim deductions in the early years of homeownership. Do we have any readers who work from home? You may be eligible to take additional deductions for your home office and some utilities.

By the way- this new home you just bought? It’s yours! Do whatever you want with it! You want orange walls? You paint those walls orange. You want a sunroom? Go ahead and add one on. This home is yours, and you can do with it whatever you please. 

So, Which Do I Choose?
Whether renting or buying is the right choice for you depends on where you choose to live, your market, and whether or not you like to tackle home improvement or maintenance projects. Tell us what you decide. Or, if you still aren’t sure which would be the smarter decision for you, give one of our agents a call at (703) 294-4500. We’d be happy to help you!

Richard Drummond (Broker-Agent) Headshot
Phone: 240-988-8100
Dated: March 19th 2014
Views: 4,606
About Richard: A native Washingtonian and licensed real estate agent for more than 25 years, Richard is the princip...

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