Renting vs. Buying

Some refer to renting a property as throwing money out of the window – others look to it as a “no responsibility and money saving” form of living. Renting and buying properties are easily comparable because the monthly costs of each choice are similar.

There are certain benefits to renting, these include; decreased in cost due to taxes not being owed to the lessee, the homeowner is able to move at any time and there are no maintenance fees or responsibility associated with the property.

The benefits that come with owning a property include; the equity that is built within the home while the mortgage is being paid and the home comes with a sense of security that is the investment of the home.
Renting can be a dangerous game – taxes could increase on the property which could cause rent increases. The renter has no control over these increases and without rent control it could be up to a twenty percent increase per year. Tax benefits are not given to those who rent their home, as well as the possibility of eviction.

Buying a home brings in some difficult questions to answer as well. An important aspect of making the decision to purchase a property or home is affordability. Many choose to rent because they are unable to afford to obtain a mortgage. To obtain a mortgage, one must qualify for a certain amount of money based on employment income, amount of mortgage and credit rating. The mortgage payment per month should not be more than thirty-five percent of the net income.

Although the prices of buying and renting are similar, there is one that decreases over time and one payment that increases over time. Renting actually increases with inflation over time, and purchasing a home actually decreases over a period of time.

When taking into account purchasing versus renting, a potential homeowner should take into account the real costs that come besides the monthly mortgage payment. These include; property taxes or condominium fees, property taxes, maintenance, utilities and home insurance as well as any other membership fees that may be associated with the home.

Taking these costs into consideration could add from five hundred to one thousand dollars per month onto the cost of the mortgage payment. Can you really afford to buy with all of these costs? What if something was to go wrong and an aspect of the home needed to be repaired – could it be worked into the monthly budget? Where would the money come from to complete the repair?

Regardless of the decision to rent or buy a home – each decision comes with its own set of benefits and drawbacks.  Visiting websites that allow the user to calculate the cost of payments when renting or buying can assist a potential homeowner in making the decision. This, as well as speaking to a certified mortgage broker to determine the true costs, as well as factoring in the costs of potential rent increases; assist the buyer in making an informed decision.