The decision to buy a home or rent a place to live is a question that is on many minds in this current market. The correct answer to this decision depends on individual circumstances, and various criteria need to be considered. You have to decide what works best for your situation and lifestyle.
Factors that should be considered include your financial situation, your lifestyle, and your future plans. Perhaps the most important question you will want to ask yourself is how long you plan on living there. It’s important to weigh the pros and cons and carefully consider your preferences before making a choice. Hopefully, this list will guide you toward the right decision for you.
Affordability – Until recently renting was generally less expensive than buying, especially for the short term. However, we’ve seen rent payments increase dramatically which has caused many to look at buying. Even buying a small home can result in payments much cheaper than rent.
Rent payments increased by 5% on average from 2013-2019. In 2021 and 2022, that increase was 10% and 7%, respectively. For 2023, the projected increase is 6.3%.
In these inflationary times, the likelihood of rents increasing each time a lease is renewed is high, while a homeowner’s payment on a fixed-rate mortgage will remain the same. And once a mortgage is paid off, the home is owned free and clear, while rent payments continue for the duration.
Equity – Owning a home can be a great investment, as the value of the property can appreciate over time. This appreciation, coupled with paying the mortgage down, can lead to significant financial gains in the long run. And as a homeowner, that equity is available if you need an influx of cash. When you pay rent, you’re building equity for the property owner rather than for yourself. Along with building equity, most homes increase in value. That means you can also net a nice profit when you sell it.
Stability – If you rent a house or apartment, your landlord can raise the rent each time you renew your lease. A landlord can also decide to sell the property which means you have to find a new place to live. With a fixed-rate mortgage on a home, your payments will remain the same month to month, and as long as you stay current on your payments, you can live there for many years, while also building equity.
Adaptability – When you live in a rental, your landlord has control. That means you have to get approval to do anything to the apartment or house. When it’s your own home, feel free to paint the walls any color you want, remodel, and more. This freedom allows you to finally live in the home of your dreams.
Deductibility – Tax breaks aren’t usually available to renters, but as homeowners, you may be able to deduct mortgage interest payments, property tax payments, energy-efficient improvements, and more.
Maintenance – Owning your own home DOES mean you have to take care of it and handle regular maintenance on your own. Well, you don’t HAVE to, but you will want to protect your investment. When you rent, there is usually a maintenance man or team on staff. The problem with that is you may be waiting a while for them to get to your issue.
Mobility – One of the main benefits of renting is the flexibility it provides. Renters have the ability to move more easily and quickly than homeowners. Additionally, renters typically have more options when it comes to choosing a location, as they can move to a different rental property if they desire to live in a different neighborhood.
Privacy – Landlords can’t just barge it at any time, but you still can’t expect much privacy when you rent. They can make scheduled appointments to inspect your property, and the landlord also has to come over if anything goes wrong. You don’t have to invite anyone into your house when you own it, though. Since it’s yours, you can enjoy as much privacy as you want.
Attachability – It’s hard to feel like part of the community when you rent a home. However, when you own your house, you will be a part of the community and form strong social ties.
Inheiritability – Are you worried about taking care of your loved ones after you pass away? Buying a home is one way you can ensure they have money when you pass. You can give the house to them, and they can sell it or have a place to live. You can’t do that with a rental.
For all of the latest information on our local real estate market in Southwestern Indiana, you can always trust the professionals at F.C. Tucker Emge. Our agents have superior training and resources at their disposal to better educate you about the road to homeownership. Even if you are 6-12 months (or more!) out from making a change, there is a lot to learn about the home buying and selling process, and our agents can help you learn what you need to know so that you can be confident in your decision and have a smooth experience when the time comes. Let’s Talk!