Breaking it even: To buy a home or just continue renting?

For many people, owning a home is the fulfilment of their childhood dreams. For others, not so. Purchasing a home is one of life’s biggest decisions most of us will make, while others will content themselves with just renting for the rest of their lives.

Which one are you?

Advantages and Disadvantages of Owning a Home

Before purchasing a home, you have to consider how the investment will affect your current lifestyle and finances. You have to review all the advantages and disadvantages of finally becoming a homeowner.

What are my advantages?

  • Greater privacy.
  • Homes normally increase in value.
  • The property tax portion and interest of your mortgage payment can be tax deductions.
  • There’s pride in owning your own property, which naturally ties you to your community. Hunting for houses, although a bit tough, is a fun, worthwhile and rewarding experience.

What are my disadvantages?

  • Home ownership requires tremendous amount of financial commitment.
  • Although your mortgage payments are typically fixed, they’re usually higher than paying rent.
  • You’re responsible for any maintenance that happens. This includes inexpensive repairs like broken pipes to complex and pricy repairs, like replacing the fireplace.
  • Having your own home ties you with the community, making it difficult to suddenly change location.
  • The value of your house may not increase – this is especially true during the first few years. You’ll have to deal with it.
  • Purchasing a home requires a big down payment, moving expenses and closing costs.

Advantages and Disadvantages of Renting a Home

It all depends on your preferred style of living and financial decision, but renting do have its advantages:

  • You have all the flexibility in the world. Most leases last for 12 months. So, if you have a job that requires you to move frequently, renting is a better alternative to owning.
  • Renting can be a LOT cheaper than buying a home. The monthly rent tends to be lower than a house payment. Also, your rent can cover utility costs, which means more savings.
  • Your landlord is responsible for all repair and maintenance on the property – it’s theirs anyway.

Financial Disadvantages of Renting

  • The housing costs aren’t fixed unlike a fixed-rate mortgage. Your rent can grow every year.
  • Tax breaking doesn’t exist. You won’t be able to get any deduction for mortgage interest as well as property taxes when filing your tax returns.

Historically, low mortgage rates should make buying your own home more attractive. There are currently plenty of good prices for houses for sale in the market. Still, while borrowing costs are low, very few people want to take the plunge. It really depends on how you envision your future.

If you plan to stay in the home at least five years, then maybe it’s time you should consider buying your own home. Why? Because often, that’s the amount of time needed to recover closing costs that comes with a home purchase. However, if you want to maintain your flexibility for a good paying job, or to start your career and can’t stay in one place, then by all means – continue renting.